Paul Lachine

­A New European Growth Agenda

The EU's leaders now recognize austerity alone cannot solve Europe's economic and financial crisis, and that growth and jobs need to be promoted with equal zeal. But, while kick-starting growth in 2012 was high on the agenda for the European Council on January 30, the big question remains: how?

BRUSSELS – Austerity alone cannot solve Europe's economic and financial crisis. Growth and jobs need to be promoted with equal zeal. European Union leaders now recognize this: kick-starting growth in 2012 was high on the agenda at the European Council’s meeting on January 30. But the big question remains: How?

The need for immediate action is clear. The eurozone’s economy contracted in the last three months of 2011; even Germany’s shrank. The new year is looking grim. France is flat-lining (as is Britain). Italy and Spain have sunk into deep recession. Greece is in its fifth year of a slump. And eurozone unemployment is at record highs, with nearly one in two young people jobless in Spain and Greece.

The economic headwinds are formidable: fiscal austerity, high interest rates outside AAA-rated countries, credit cutting by banks, deleveraging households, weak private-sector investment, and declining exports as the global slowdown undermines demand.

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