EU leaders are meeting for a two-day summit in Brussels to take stock of lagging reforms aimed at jump-starting the economy.
European Parliament chief Martin Schulz is likely to repeat his warning that a blind austerity drive may have saved the banks, but at the cost of an entire generation of youngsters who cannot find a job. His native country, Germany, continues to argue that sticking to the EU deficit and debt rules, cutting back budgets and making it easier for companies to hire and fire workers will eventually pay off, even as economic forecasts show a longer-than expected recession in the eurozone.
Speaking to journalists in Berlin on Wednesday, German finance minister Wolfgang Schäuble said his government is setting a "positive example" of budget discipline as it plans to reach a zero deficit by 2015. With tax revenues at record highs and borrowing costs at historical lows, Germany stands in stark contrast with most countries in the eurozone. The German delegation insisted for the term "fiscal consolidation" to be inserted at least four times in the latest draft conclusions, according to an EU source.
Meanwhile, France is trying to shift the focus onto the so-called growth pact - a collection of initiatives such as pilot investment projects and a €6 billion scheme to help unemployed youngsters to get a job. The measures were approved last year, but the necessary legal acts are still not finalised. Paris itself is struggling with EU deficit targets with President François Hollande earlier this week admitting that his country will miss this year's deficit target by 0.7 per cent. One question is whether the country will be granted extra time to meet its deficit target, as was the case for Spain.
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