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Growth to usurp agenda at EU summit?

Thursday, October 23, 2014 - 02:30

EU leaders meeting for a two-day summit on climate and energy policy may also be forced to grapple with the continuing doubts over the euro zone growth story. Latest data shows a surprise rise in euro zone business activity this month - but prices and optimism still falling. David Pollard reports

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It's meant to be a day of talks for European leaders. It felt more like a day of protest at their presence. These climate activists say the EU isn't doing enough on emissions. These police - like many public sector workers in the euro zone - are complaining at changes to their pensions. As for the summit itself, a climate and energy agreement is the official agenda. Swedish prime minister Stefan Loefven. SOUNDBITE (English) STEFAN LOEFVEN, SWEDISH PRIME MINISTER: "I believe it is very complex, because there are many different ingredients that you need to have in place before you have an agreement. But definitely we must make the best effort, because it is good for the European Union itself. We can combine definitely high environmental standards with growth, jobs and development." Leaders, though, have agendas of their own. The UK's David Cameron sees, it's reported, as an occasion to lobby against EU requests for more funds from member states. The pressing issue for France and Italy is their EU rule defying budgets. In the latest development there, Italy has been asked to explain to the European Commission why it intends to breach debt-reduction targets. That could potentially lead to demands from Brussels for Italy to change its spending package. And then there's the euro zone economy. Latest PMI data shows an unexpected rise in activity this month. But price cutting by firms is at its most aggressive in nearly five years - giving the ECB more worries over deflation. And future optimism in the services sector is at its lowest in over a year. On the plus side, Germany shows a few signs of picking up, says Chris Beauchamp of IG. SOUNDBITE (English) CHRIS BEAUCHAMP, MARKET COMMENTATOR, IG: ''It's a good time that German manufacturing especially has turned around for the time being, the powerhouse of Europe - where Germany goes, everyone else follows. So that will give the euro zone a breathing space. We don't expect too much from the European Council .... I think they're going to be keen to promote an aura of unity to give the impression that everything is alright in the eurozone.'' Unity or not, Europe is looking to its leaders to do more, says ING's Carsten Brzeski. SOUNDBITE (English) CARSTEN BRZESKI, SENIOR ECONOMIST, ING: ''Honestly, it's going to be very interesting what European leaders will decide tomorrow in Brussels. Whether they can and actually finally agree to add some more stimulus into the euro zone economy because right now, it's only the ECB which is doing the job and the ECB alone cannot save the euro zone. The ECB alone cannot ensure that the euro zone economy is picking up steam again. So we need this fiscal stimulus, we need structural reforms. And if we don't get it, I think that we have to or we're looking into a rather gloomy future. If we get it, I think 2015 could be the start of a somewhat brighter future." As for the business of the day, the leaders are aiming to agree a new decade of energy policy to cut emissions. But sharp differences there too, over sharing the cost, could make a deal hard to reach.

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Growth to usurp agenda at EU summit?

Thursday, October 23, 2014 - 02:30