Will the EU really turn to growth?

“What [EU leaders] are trying to do about youth unemployment is useful if done well … facilitating the young into the labor market is a good thing,” says Thomas Klau of the Paris office of European Council of Foreign Relations. “But if you look at the urgency of the growth problem in Europe, the measures that have been decided are almost certainly not enough.”

Citibank officials derisively described the outcome of the meeting as a “compact for low growth,” Reuters reports.

Yesterday's meeting had “no positive surprises, no negative surprises,” argues Sony Kapoor of the Brussels think tank Re-Define, which yesterday put out a comprehensive plan for EU growth. “But the growth aspect [of yesterday's meeting] is still rhetorical and largely irrelevant to the current needs of the crisis, and seems something of a political ruse," he said. 

Mr. Kapoor added, "The sum total of the proposals are small and unambitious in scale and scope…to counter what we face…we need more ambitious and pan-European proposals…the No. 1 need is infrastructure." 

The urgency and divisiveness evident in the last EU meeting in early December was more muted yesterday – partially because of actions taken by the European Central Bank, which broke with its traditions last month to lend some 500 billion euros ($654 billion) to European banks.

The lending, comparable to the US Federal Reserve's “quantitative easing,” has bought the EU some “breathing space,” says Jacob Kirkegaaed, a fellow at the Peterson Institute for International Economics.

Some analysts, like Philip Whyte of the Center for European Reform in London, say the problem is a “lack of demand” for goods and services that can be solved primarily by growth policies. “Slashing spending as economies contract is not the complete answer,” he says. “Yet this is what we are hearing.”

For two years, EU leaders have agreed and acted on belt-tightening measures, slashing spending in Greece, Spain, Italy, and France as four governments fell, bailout funds were disbursed, and unemployment figures rose, reaching a 10.4 percent average across the eurozone by the end of 2011.

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