The heads of government of the 28 member states of the EU are meeting in Brussels. It is important to note that this is the first meeting after the European Parliament elections. They produced conflicting results.

Here’s a brief recap. In some countries the sceptics (projecting an agenda which promotes an exit from either the EU or the eurozone or both) won the day; in other countries, the incumbent party in government was the winner mainly because it promoted an agenda of change; and in some countries, one of the traditional parties in opposition scored a victory.

However, the key and consistent message that emerged was that the electorate has had enough of economic austerity and is expecting governments to give priority to economic growth and employment creation. Whether the European Council will heed this message will be known when the final communiqué is published at some stage today.

The agenda includes issues such as climate and energy, freedom, security and justice and international developments. The most important item of the agenda is called ‘The European Semester’ – a very innocuous sounding topic.

However, the published agenda does state that under this item, the European Council will exchange views on the action to be taken at national level and endorse country-specific recommendations to guide member states in their structural reforms, employment policies and national budgets. This essentially implies that the heads of government shall be discussing and hopefully agreeing on what the economic agenda for the coming months should be.

The economic agenda must also include initiatives aimed at providing more liquidity to the real economy

It needs to be viewed in the light of two important developments. On July 1, that is on Tuesday, Italy is to take over the presidency of the EU. It is known that Italian Prime Minister Matteo Renzi wants to give priority to employment rather than fiscal consolidation.

The other development is the expected endorsement of Jean-Claude Juncker, the former prime minister of Luxembourg, as president of the European Commission, a proponent of stronger European integration while keeping in mind local realties. The president of the European Council, Hermann van Rompuy, prepared a document for this summit which should have included a proposal for a single market for energy and to make space for private sector investment. Moreover, the document should also have proposed that use is made of the flexibility provided in the Growth and Stability Pact with respect to structural reforms.

In essence, what this flexibility implies is that public expenditure that is incurred in the implementation of structural reforms need not be taken into account when calculating the deficit to GDP ratio. Economic growth and employment are likely to play a key role in this strategic document that the heads of government have to approve.

The president of the Council is proposing that “the EU needs to take bold steps to increase investment, to create employment and to incentivise the implementation of structural reforms to enhance competitiveness”.

German Chancellor Angela Merkel has shown a positive disposition towards having more flexibility in public finances by taking into account public sector investments aimed at introducing structural reforms.

It therefore seems quite likely that EU economic agenda for the near future is likely to focus on structural reforms. This does not necessarily mean economic austerity or cuts in public expenditure or increases in taxation. It is likely to mean taking measures to eliminate waste in the public sector, removing rigidities in factor and product markets to achieve efficiencies and enabling the private sector to invest more.

However, to close the circle, the economic agenda must also include initiatives aimed at providing more liquidity to the real economy. An economic take-off is hardly likely to happen unless banks play their part as well.