Europe needs more public investment to strengthen recovery, defeat terrorism and help refugees

Europe needs more public investment to strengthen recovery, defeat terrorism and help refugees, greater public investment across the EU is crucial, refugees, terrorism, Progressive Economy initiative, an independent Annual Growth Survey, iAGS 2016, Maria

Today, S&D Euro MPs called on the European Commission to envisage greater public investment and focus on domestic demand as a real economic priority for 2016. With global demand slowing down, interest rates record low, terrorism on the rise and large numbers of refugees arriving, greater public investment across the EU is crucial for staying on track towards lasting growth.
 
For the fourth year, the S&D Group presents as part of its Progressive Economy initiative*an independent Annual Growth Survey, written by four independent economic institutes. The iAGS 2016 analyses the economic situation in Europe, compares various scenarios of economic policy and makes recommendations on economic priorities for the year ahead. It highlights that Europe has run a huge trade surplus against the world at the price of high unemployment and suppressed domestic investment (see executive summary here). The iAGS 2016 is presented just before the Commission launches the 2016 European Semester by adopting the Annual Growth Survey and tabling policy recommendations for the Euro area.

S&D Group vice-president for economic and social policies and European Parliament's rapporteur on the 2016 Annual Growth Survey, Maria João Rodrigues, said:
 
"Europe's economic recovery remains too slow to significantly reduce our still very high unemployment rate. Europe is lagging behind the US and other economies due to a lack of investment, weak internal demand and an excessive current account surplus. We call for a coordinated plan for stronger recovery: while some countries need to keep consolidating their public budgets, others could and should support domestic demand in Europe through much greater public investment.
 
"We cannot build lasting prosperity without investments in education, green energy, migrants' integration or improved security. Europe has under-invested for many years and it must take advantage of low interest rates to break this vicious circle. Only through greater investment can Europe remain successful in global competition. We are lucky that oil is cheap now, but we should invest all money saved on oil into energy efficiency, renewables, new technologies and skills.
 
"The European Commission has advocated a 'virtuous triangle' of fiscal responsibility, structural reform and mainly private investment. In our view, we need a 'solid square', with domestic demand as the fourth priority. The Eurozone is running the largest surplus in the world, but this engine is simply not strong enough for robust growth and high employment.
 
"The European economy can do much better if we finally start reducing social inequalities. Low and medium income households would spend or invest every additional euro if they had it, but huge amounts of value created in Europe are lost to tax havens. We expect the Commission to recognise that 'structural reforms' should focus on these kinds of problems: improved tax collection, better public services and renewed fairness. Europeans must be able to enjoy equal opportunities once again – those who work hard need to have good prospects again, even if they grew up in poor neighbourhoods."

Related documents 
iAGS 2016 - Executive Summary
24/11/2015
2016 iAGS Full Report
26/11/2015