This week's European Council marked a changing of the guard, with the new president of the council, Donald Tusk, and of the European Commission, Jean-Claude Juncker, taking up their posts. The duo presided over a low-key summit, which ended sooner than expected – a one-day rather than two-day event – with EU leaders agreeing in principle to back Mr Juncker's major investment plan.
The aim is to generate €315 billion over three years for investment in EU infrastructure projects. The highly leveraged European Fund for Strategic Investment will use €21 billion in European seed capital – provided by the Commission and the European Investment Bank – to attract some €300 billion in private finance. Member states can provide national top-ups, without affecting their EU deficit and debt calculations.
A feature of the economic downturn has been the EU's failure to produce sooner a plan to boost economic activity. For too long too much reliance has been placed on the European Central Bank to provide a monetary stimulus to boost growth. The bank's restrained monetary easing has had limited effect. The euro zone still remains at risk of a possible third recession. Its economy is marked by low growth, and high unemployment, and deflation rather than inflation is the greater hazard. In contrast, Ireland remains Europe's fastest growing economy, with unemployment - at 10.7 per cent – below the euro area average.
A surprise announcement on the eve of the European Council meeting was the Commission’s decision to request all 28 EU member states to supply information on tax rulings. To date only six countries have been asked to do so, of which three – including Ireland – are being investigated by the commission for a breach of state aid rules. As all member states now face the same scrutiny on their tax rulings (negotiated between national tax authorities and individual companies to “optimise” their tax bills) this should ensure all are now judged by the same set of rules. An outcome Taoiseach Enda Kenny has welcomed, and strongly supported.