LISBON May 2 European Union governments and
institutions must take "immediate action" to promote growth and
jobs creation as countries are tired of austerity, European
Council President Herman Van Rompuy said on Thursday.
"Taking these measures is more urgent than anything," he
told a conference in Portugal. "After three years of firefights,
patience with austerity is wearing understandably thin."
Still, he said Europe cannot completely veer off the course
of reducing budget deficits and has to find "the right path"
between deficit cuts and pro-growth measures, while continuing
with structural reforms and ensuring financial stability.
Van Rompuy's remarks add to a growing chorus of euro zone
policymakers acknowledging that fiscal rigour to contain the
region's debt crisis must be tempered with steps to stimulate
economies experiencing feeble growth and alarming levels of
Van Rompuy said the easing of deficit targets for countries
like bailed-out Portugal, as decided in March, or giving
countries more time to repay rescue loans was the kind of
healthy pragmatism he supported for other European countries.
He called on the European Central Bank and European
Investment Bank to work to ease the key problem of funding
strains of small and medium-sized companies while banks are
still reluctant to take on further credit risk. He did not
specify what other growth measures should be taken.
Another step that should help the EU prevent future crises
is the completion of the banking union to separate sovereign
risks from financial sector risks.
"We can't afford to have a half-built system ... I urge
legislators to agree on harmonising national resolution
mechanisms and set up a deposit guarantee scheme," he said.
Van Rompuy praised the austerity efforts of countries like
Portugal and Ireland that allowed to "restore the confidence in
the euro" and maintain the euro zone intact.