EU summit: European leaders focus on growth, not cuts





European leaders are seeking to refocus their efforts to tame the financial and economic crisis away from the crushing austerity programmes hitting much of Europe and towards policies to boost growth.

But while an EU summit in Brussels agreed on the need for growth, there were bitter disputes over the means to that end, with France and Britain at loggerheads over how best to kickstart moribund economies.

After complaining on Thursday evening that no one in Europe was listening to him, David Cameron claimed on Friday that the summit had gone his way and that he had converted the rest of the EU leaders to his free market vision of deregulation and liberalising services.

“The [summit] communique has been fundamentally rewritten in line with our demands,” the prime minister asserted. “Our letter really did become the agenda for the European council [summit].”

That view was dismissed by other European officials as “nonsense”.

In the run-up to the summit Cameron enlisted the support of 11 other EU heads of government for a letter calling for a liberalising free market drive to boost growth in Europe. The signatories went beyond the UK’s habitual Scandinavian allies to include the new prime ministers of Italy and Spain.

Downing Street sees the Italian and Spanish support as a coup.

The UK-led drive was not explicitly supported by the EU’s two biggest countries, Germany and France, however, and President Nicolas Sarkozy of France, in electioneering mode, on Friday gave short shrift to the British position.

Germany and France could comfortably support many of the demands in the UK-drafted letter, said Sarkozy, before adding: “The temptation of deregulation is ever-present with our British and Swedish friends and there we don’t want to see that on the table.”

The overwhelming majority of leaders, 25 of 27, signed the fiscal pact, a new international treaty demanded by Berlin aimed at resolving Europe’s debt crisis by setting constitutional limits on national debt levels and budget deficits and empowering the European commission and the European court of justice to rule on compliance with the pact and levy hefty fines on fiscal sinners.

Cameron and his Czech counterpart were the two refusing to sign up for the treaty, which is one of the central EU responses to the sovereign debt and single currency crisis.

While the German chancellor, Angela Merkel, hailed the signing of the pact as the summit’s central achievement, the treaty could yet run into trouble since it has still to be ratified. The Irish have announced a referendum on the treaty while François Hollande, the French socialist tipped to become president in May, is threatening to reopen it.

Cameron also called on the 17 leaders of the eurozone on Friday to deliver a commitment to boost the firewall aimed at preventing a bigger sovereign debt crisis spreading from Greece.

The prime minister said the other leaders should explicitly commit themselves to increasing the firewall – the European stability mechanism – beyond the envisaged capacity of €500bn (£415bn) before meetings of the International Monetary Fund in Washington next month.

Merkel tetchily dismissed the demand, witnesses said.