Global answers to global challenges

MMany of you will have seen the latest forecasts to come out of the European Union which paint a gloomy picture of the state of Europe's economy. The eurozone is forecast to shrink by four per cent this year with only a 0.1 per cent recovery foreseen for the whole of 2010. The jobless rate is predicted to rise to 9.9 per cent this year and 11.5 per cent next year, meaning that 26 million people could be out of work in 2010.

This is a crisis unprecedented since the end of the Second World War and clearly far deeper and wider than many could have predicted a few months back.

Malta is feeling the pinch too. According to official figures, Malta entered recession at the end of last year.

Within this rather bleak landscape, both national governments and the EU are working to reverse the trend.

For its part, the government, in its last Budget, promised to undertake forward-looking investments such as infrastructural works, including environmental and alternative energy projects and measures aimed at enhancing people's skills and incentivising enterprises.

Membership of the Union and of the euro have certainly provided Malta with some form of insulation from the crisis. I would not like to think what the impact of the crisis might have been had we been going it alone.

But fortunately - and five years after Malta's accession to the Union is certainly a good time to ponder the benefits membership has brought - Malta has found itself buffeted from an even worse situation by being an integral part of a Union that has reacted strongly to the global downturn.

Last November, the EU adopted a European Economic Recovery Plan, worth €200 billion, aimed at restoring consumer and business confidence by restarting lending, stimulating investment, creating jobs and helping the unemployed back into work. The EU is also working to tighten the regulation for financial markets, banks and insurance companies and to fill the gaps where European or national regulation is incomplete.

At a national level, member states - including Malta - benefit directly from a wide range of EU programmes and financial instruments that can help to alleviate some of the burden on workers, households and businesses. The European Social Fund is one such instrument, offering financial support in the field of employment, education and training. The EU is contributing approximately €112 million to Malta for 2007-2013 under this Fund. Another example is the European Globalisation Adjustment Fund which helps workers whenever they are made redundant as a result of changing global trade patterns. Malta has already received just over €650,000 from this fund for layoffs in 2007.

But is this enough to bring about a turnaround to kick-start the economy, or do we need to do more?

The solution cannot be found by Malta acting on its own. We have to search for ways to reverse this downturn by means of global and European measures and not just local ones.

Today no economy is an island. Whatever is good for the global - and, closer to home, the European - economy, will also benefit Malta.

At the G20 London Summit held last April, a number of promising actions were announced whereby the IMF and other banks will pool together to provide more financial support aimed at tackling the global downturn. Emphasis will also be placed on trade support and further financial regulation.

I expect that more progress will also be made at the European Employment Summit, which is being held as I write. There, the Commission and our social partners will surely address the dim prospects facing workers across the Union. They will focus on fostering a coordinated approach to integrating economic, employment and social policies. They will also speak out against protectionism - a temptation which could wipe out the gains made in global trade over the past 50 years - and the need to respect the single market.

In parallel, we will have to look at the structural reforms, many of which were already in the pipeline, that are necessary to strengthen our competitiveness and growth potential.

Recession is painful and will continue to be so for some time. But the European Commission is working hard with member states and its social partners to do all that it takes to alleviate the worst effects in the short term and to find solutions for the future.

The objective is to make of Europe a truly inclusive, innovative and low-carbon economy not just for the sake of it but for the sake of a better standard of living for all.

Dr Borg is the European Commissioner for Maritime and Fisheries Affairs