EU may use $252b to fight recession
BRUSSELS - European Union finance ministers yesterday endorsed a public spending plan that would pump about $252 billion over two years into an economy that has fallen into recession.
The ministers called a recovery plan drafted by the European Commission a good basis to stimulate the 27-country EU's economy, which shrank 0.2 percent in the second and third quarters.
A final decision lies with EU leaders, who meet in Brussels Dec. 11-12.
The plan foresees public spending "in the magnitude of 1.5 percent" of the EU's gross domestic product.
Finance ministers ruled out allowing cuts in sales taxes to under the minimum of 15 percent.
Britain has cut its value-added tax charged at the point of sale from 17.5 percent to 15 percent until the end of 2009. But Germany and France are opposed, fearing it will shrink state revenues and do little to encourage shoppers to spend.
"You must explain to me whether they would really buy a DVD player for 39.60 instead of 39.90," German finance minister Peer Steinbrueck said.
EU governments agreed to more than double a crisis fund to help member states. They said the international economic situation justified a higher limit for loans to the 11 of the EU's 27 nations that don't use the euro.
The meeting yielded no agreement on a French demand to lower value-added, or sales, taxes in "labor-intensive" industries like restaurants.
Germany, Britain, and France have already laid out spending plans that would count for a large share of the EU total.