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EU Proposes $256 Billion Stimulus Plan

The Associated Press

BRUSSELS, Belgium -- The European Commission wants EU governments to jointly combat the growing economic slowdown with a 200 billion euro ($256.2 billion) stimulus plan to boost growth and confidence among consumers and businesses.

In a two-year European Economic Recovery Plan, made public Wednesday, it calls on the 27 EU governments to spend more to halt the accelerating economic slowdown that has pushed some European nations into recession.

The proposed stimulus plan would represent 1.5% of EU gross domestic product. Around 170 billion euros would come from national governments and the rest from EU funds and the bloc's lending arm, the European Investment Bank.

"Exceptional times call for exceptional measures," said European Commission President Jose Manuel Barroso.

"The jobs and well-being of our citizens are at stake. Europe needs to extend to the real economy its unprecedented coordination over financial markets," he said in a statement. "This recovery plan is big and bold, yet strategic and sustainable."

He said that just as in recent weeks when EU governments acted jointly to shore up credit and restore some market confidence, they should act together again on fiscal measures.

"Now EU member states should again take advantage of the strengths of the EU: effective coordination (and) the benefits of scale offered by the euro and the largest single market in the world.'

The economic stimulus report comes a day after the Paris-based Organization for Economic Cooperation and Development said the financial crisis will likely push the world's developed countries into their worst recession since the early 1980s.

The Paris-based OECD said economic output will likely shrink by 0.4% in 2009 for the 30 market democracies that make up its membership, against the 1.4% growth prediction for 2008.

The European Commission echoed the OECD conclusion that now is the time for significant fiscal rescue measures -- including tax cuts -- provided they were timely, targeted, temporary and coordinated.

On Nov. 14, the zone of 15 EU nations that share the euro as their currency officially entered a recession, recording a 0.2% drop in economic output for two successive quarters.