EU argues over balance between austerity, growth

Fri Mar 2, 2012 4:46am EST
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By Paul Taylor and Luke Baker

BRUSSELS (Reuters) - European Union leaders argued on Thursday over the right balance between budget austerity and reviving lost growth at the first summit for two years in which the euro zone debt crisis did not eclipse all else.

After their finance ministers gave provisional approval to a second bailout for Greece, and a flood of cheap European Central Bank funds calmed bond markets, the 27 leaders used the breathing space to focus on structural economic reforms and other ways to combat record unemployment.

They also agreed to give Serbia candidate status for EU membership and reappointed former Belgian Prime Minister Herman Van Rompuy for a second 2-1/2-year term as president of the European Council, adding the role of chairing new twice-yearly summits of the 17-member euro zone.

Leaders of 25 of the 27 countries will sign a German-driven fiscal compact treaty on Friday to enforce EU deficit-cutting and debt reduction rules more strictly.

But without a return to growth several European countries risk entering the same spiral of depression as Greece.

"For too long, our crisis management has erred too far towards austerity," European Parliament President Martin Schulz, a German Social Democrat, told the leaders bluntly.

British Prime Minister David Cameron told reporters that Europe faced a growth crisis as well as a debt crisis.

Diplomats said Cameron won support from Italy's Mario Monti and Dutch Prime Minister Mark Rutte when he complained that a draft summit statement paid insufficient attention to a call by 12 EU leaders for more market deregulation to unleash economic dynamism.   Continued...