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Economic crisis tops Sweden’s EU presidency agenda

Prime Minister Fredrik Reinfeldt and Minister of Finance Anders Borg outline Sweden's priorities for the upcoming EU presidency.

These are tough and trying times for Europe and its citizens. Following an unprecedented financial crisis, the global economy has deteriorated sharply, leading to rising unemployment, increased protectionist tendencies and growing economic uncertainty. Under the leadership of the French and Czech European Union presidencies, the EU has acted decisively to avert a financial meltdown. But given the scope of the challenges we face, much remains to be done.

When Sweden takes over the EU presidency next month, the economic and financial affairs of Europe will be among our priorities. Our first economic objective will be to manage the EU’s efforts to combat the downturn. Our starting point will be the current agenda for growth, competition and employment. Two challenges stand out: restoring the functioning of, and confidence in, financial markets, and countering the negative impact on employment and growth. To address the first of these issues, we need to continue working on the design and implementation of schemes to restore credit supply. This is imperative if the EU is to return to sustainable growth in the short term.

We will also have to tackle the further dramatic increase in unemployment that we know will occur. We therefore welcome the European Commission’s recent proposal to retrain workers and help them start their own businesses. Active labour market policies will be particularly significant in maintaining employability, not least to prevent the re-emergence of protectionist pressures. How we meet the labour market challenge today will largely determine the growth potential of the EU. Preventing unemployment becoming entrenched is therefore crucial.

Strengthening financial market supervision and regulation is our second main objective. We must heed the lessons of the financial crisis and make every effort to reduce the risk of similar problems recurring and harming future generations. Initiatives to establish a new structure for European financial sector supervision, as proposed by the de Larosière report and most recently the Commission, aim to enhance the ability to detect threats to financial stability. We will seek political agreement on these.

A third important objective relates to the long-term sustainability of public finances in member states. The current downturn has put significant pressure on national budgets, with increasing deficits and escalating debt. We are concerned that budgetary discipline was not observed in the good times; the results are clear now.

Budgetary discipline and sound public finances are essential to foster economic growth. Furthermore, we need to formulate a strategy on how member states can start to reverse their large deficits, in line with the stability and growth pact, and prepare to meet future demographic challenges.

The Swedish presidency will also involve preparations for the Lisbon Strategy on economic development after 2010. It is clear that Europe needs a revitalzed strategy for sustainable growth and full employment – a strategy to transform our Union into an economy that will reap the benefits of globalization. Specifically, this means making work pay, promoting investment in human capital and research, advancing external and internal openness, and further improving the environment for business and innovation. The positive impact of greater labour force participation on growth and welfare must also be emphasized, especially in the case of women, whose employment rate is currently on average 14 percentage points below that of men in the EU. Greater access to affordable childcare and tax systems favouring labour market entry will boost the employment of women. Most importantly, the successful implementation of the Lisbon strategy requires more efficient benchmarking and evaluation, and robust institutional frameworks underpinning increased productivity and long-term growth.

We look forward to pursuing this economic agenda during the Swedish presidency, with our fellow EU governments, the Commission and the European parliament. It is an ambitious programme but, with hard work and strong political will, progress can be made. Together we can restore the basis for growth and stability in Europe and bring hope and prosperity to its citizens.

This article was originally published in the Financial Times on Friday, June 5th and was republished by The Local with permission from the Prime Minister’s Office.

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EU pledges climate cash to poor nations: Reinfeldt

Swedish Prime Minister Fredrik Reinfeldt has announced that the European Union's member states have agreed to give €7.2 billion ($10.6 billion, 75.3 billion kronor) to help developing nations tackle climate change.

EU pledges climate cash to poor nations: Reinfeldt

“The EU total is equal to €2.4 billion per year,” over the next three years, with voluntary pledges coming in from all 27 EU member states, Reinfeldt said after a two-day EU summit in Brussels, held under the auspices of the Swedish EU presidency.

The ‘fast start’ money is Europe’s contribution to helping the developing world to adapt to global warming over the next three years and to encourage the ongoing UN climate change conference in Copenhagen to do more.

“It was also possible through the night to get contributions from all 27 member states,” and the European commission, Reinfeldt said, as the voluntary pledges topped the €6 billion target set by the Swedish EU presidency.

EU commission chief Jose Manuel Barros said he hoped other nations would now match the EU’s ambitions. British premier Gordon Brown and French President Nicolas Sarkozy also demanded that leaders in Copenhagen agree a treaty that would be “legally binding within six months,” and issued a new target for a global reduction in deforestation, which should reach 25 percent by 2015.

Brown raised recession-mired Britain’s contribution to £1.2 billion ($2 billion), with Sarkozy all but matching the figure, meaning that between them Britain and France pledged €2.5 billion.

Downing Street said Britain would boost its contribution further “if others are equally ambitious in Copenhagen.” The British Prime Minister said a final Copenhagen deal must be consistent with a Group of 20 leaders’ commitment to maintain global warming to a maximum of two degrees Celsius, compared to pre-industrial times.

Towards that end, the EU should commit to reduce its emissions by 30 percent by 2020, he added, although his peers in Brussels have said that should be conditional upon similar movement from other big polluters like China and the United States, which is not yet the case.

EU figures published last week showed confirmed pledges from developed nations outside Europe would mean carbon dioxide cuts of just 13 percent. Sarkozy said the boost to Europe’s financial pledge was important to “give credibility to rich countries’ commitments towards African countries, which we need (to come on board) in order to get an ambitious deal.”

“What’s expensive is doing nothing. What is costly is immobility, is failure,” he said. The French leader said he and Brown will host a dozen African heads of state from the Congo basin on Wednesday “to tell them that we want to help them fight deforestation.”

Environmental group Greenpeace gave the EU cash pledge a cautious welcome. “Short term funding is necessary but there is a risk that this will be used to greenwash an outcome which is weak and doesn’t have any structural needs-based funding. Climate change will not be beaten in three years,” Greenpeace EU campaigner Joris den Blanken said.

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