* Sweden says EU must do more on deficits, unemployment
* Priorities for EU presidency include financial regulation
* Climate change also at top of agenda
By Timothy Heritage
STOCKHOLM, June 30 (Reuters) - The European Union must do more to fight rising public debt and unemployment to ensure any recovery from economic crisis is sustainable, Sweden said on Tuesday before taking over the EU presidency.
Setting out the priorities for its six-month presidency starting at midnight, the Swedish government said EU leaders must also tighten supervision of the financial system and convince voters they are up to the task of ending the crisis.
"The time for pushing for more stimulus packages is exhausted. It’s exit strategies we will ask for," Prime Minister Fredrik Reinfeldt told reporters.
He said further deficit increases risked creating new imbalances in the European economy and called for coordinated action by all 27 EU member states.
The European Commission, the EU executive, forecasts the EU overall deficit will be 6 percent this year and 7.3 percent in 2010 unless policies are changed. It was 2.3 percent last year.
Reinfeldt and other ministers who met reporters to discuss Sweden’s presidency made clear action was needed to win back the confidence of voters who showed their discontent in a record-low turnout for this month’s European Parliament election.
They said lasting solutions were needed as European leaders try to avert more street protests over the economic crisis, in which their action has been criticised as too little, too late.
"We’ve seen a significant increase of debt and unemployment. We strongly believe we have to find a common approach to an exit strategy. Our hope is we could formulate ... progress on long-term sustainability." Finance Minister Anders Borg said.
"The European leaders must be able to meet their voters and say we met the worst crisis in decades and were able to deal with it," he said.
Borg and Reinfeldt gave few details of what the EU should do to cut deficits and boost unemployment, which rose in April to 9.2 percent among the 16 countries that use the euro currency.
Both are areas in which national governments have a stronger role to play than the EU leadership.
Borg said a starting point was the EU’s Stability and Growth Pact which limits public deficits to 3 percent of gross domestic product. But, acknowledging it was hard to meet targets during the crisis, he said: "It won’t be easy to get agreement."
Borg and Reinfeldt also said a "stronger rule book" was needed on supervision of the financial system.
EU leaders have already agreed they will seek tighter rules, including the creation of pan-European standard-setting and risk-monitoring bodies in 2010. Reinfeldt said these would be worked on during the Swedish presidency. [ID:nLT699475]
Sweden’s other priorities during the presidency, which it takes over from the Czech Republic, include agreeing an EU position for climate talks in Copenhagen in December at which a new United Nations treaty on emissions is sought. [ID:nLO732689]
Sweden’s presidency could also be dominated by an Irish referendum on the Lisbon Treaty which is designed to streamline decision-making in the EU now that it has 27 member states, and give the bloc a bigger say in world affairs.
The treaty needs the approval of all member states to go into force. Ireland has rejected the treaty once. [ID:nLT603894]
Poland and the Czech Republic are yet to complete approval. Germany’s highest court ruled on Tuesday the treaty was compatible with national law but demanded changes to domestic legislation before it can be formally ratified. [ID:nLU253850]