World financial crisis

Europe introduces 200-billion stimulus package

Article published on the 2008-11-26 Latest update 2008-11-26 15:55 TU

Barroso at a news conference in Brussels, annoucing stimulus package proposal, 26 November 2008
(Photo: Reuters)

The European Commission announced a 200-billion-euro stimulus package on Wednesday that would add to the billions already committed and proposed by individual member states. An estimated 170 billion euros will come from national governments and the rest from the European Union budget and the European Investment Bank.

“Co-ordinated European action can and will make a difference,” said José Manuel Barroso, head of the Commission. “Business as usual is not an option.”

States will be urged to formally sign the plan at a European summit meeting in Brussels on 11-12 December.

“I expect this package to receive strong support from European governments,” said Barroso.

The Commission has urged governments to step up spending, urging a focus on measures to help the poor, as well as investments in Europe as a whole.

Individual states have been rolling out their own stimulus packages, with Britain announcing a cut in the value added tax on Monday, meant to boost spending. The package, worth 20 billion pounds (23.6 billion euros), is to be financed by increasing taxes on the top income tax bracket.

France announced a 22-billion-euro plan in October to help finance small and mid-sized companies and launched a 20-billion-euro strategic investment fund, while Germany adopted 15 measures earlier in November, including tax breaks on buying new cars.

Germany’s Chancellor Angela Merkel is sceptical of any EU-wide initiatives, warning against a “race” between member states on who can pass the biggest stimulus package.

“We should not fall into a race of billions [of euros],” she said in a speech to Parliament.