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Callanan Martin June 2011 2Martin Callanan MEP is Chairman of the European Conservatives. Follow the ECR Group on Twitter.

Jobs and growth has become the new motherhood and apple pie in Brussels. In typical Eurocrat fashion they have already created new words to sum up what we need: growsterity or even growtherity.

They say we need to grow our economies whilst continuing to pay down debts.

It is, of course, something that we Conservatives have no problem accepting. We know that the private sector is the train's locomotive and the state is the carriage. For evidence of this, you only need to read the excellent column by City AM editor Allister Heath last week laying out some of the many studies showing how lower taxes and less public spending lead to greater consumption and investment.

Cutting the size of the state carriage will make that locomotive move faster.

Unfortunately, across the EU, socialist parties are attempting to play a very dangerous and irresponsible game. They are trying to tell the voters that economic growth is possible – just as long as we start to grow the state again using the old policies of borrow, tax and spend. Nowhere is this more prevalent in the UK where Labour has gone far further than even President Hollande, who has accepted that all countries need to live within their means. Labour is now even further to the left of the economic scale than a French socialist who proposed a 75% rate of income tax.


Thankfully, at least for the moment, Europe is not about to rush back to a new wave of Keynesianism.

Instead, we seem destined to hold summit after summit, debate after debate, dinner after dinner, talking about the need for growth and jobs – but delivering little more than words. The only growth to come out of the European Council is the growth in the £280 million new headquarters being erected next to it  – complete with a 'humane gathering place' and 'diversity carpet'. Sometimes I really do wonder what planet they are on.

Ahead of last week's summit – the 22nd since 2009 – the European Parliament held a debate on the growth priorities Prime Ministers should set.

Incidentally, with all of the action happening in Brussels, MEPs were once again forced to make our monthly trek to Strasbourg. Because we were not in Brussels, neither President Barroso of the commission, nor Herman Van Rompuy of the council, were able to attend in the customary manner – once again highlighting the complete folly of our travelling circus.

I told the group leaders that the EU needs to slash red tape, get rid of well-meaning but job-destroying employment legislation, use the single market to create competition, and reform the budget to do a lot more with a lot less. I criticised the EU's current ten-year economic plan – called the EU 2020 strategy. You may have heard of its predecessor, the Lisbon Strategy. It set out to create, "the most competitive and dynamic knowledge-based economy in the world capable of sustainable economic growth with more and better jobs and greater social cohesion", by 2010.

Well, wasn't that a resounding success?!

But, rather than learning the lessons of its failure, the commission brought forward the EU 2020 strategy as its successor. Now, it's not all bad. As I said in my speech there are parts to appeal to a liberal conservative, parts that appeal to a socialist, and so on. But that's the problem. The commission has no idea which way to go, and frankly President Barroso currently seems to have no idea where to steer them. I don't disagree with Francois Hollande that the EU needs a growth strategy. Personally I see no need to attach some fancy document to the fiscal compact treaty. Instead, we just need the European Commission to use its so-called 'right of initiative' to actually take some initiative. And in many cases, that initiative would require the commission to undo some of its previous actions and legislation, and even hand away some of its own powers to a much lower level.

In short, it needs to understand that when you have a small state, the people prosper, and when you have a big state, the people are less prosperous and less free. This is the real crisis the EU faces today: it is losing all competitiveness. Richard Ashworth wrote about it on Wednesday for ConHome. To perhaps stretch the analogy above, our train is Stephenson's Rocket, and it is being rapidly overtaken by the Chinese Maglev.

David Cameron and eleven other EU leaders from northern and southern Europe co-signed a letter to the commission setting out an agenda they should pursue. You can read it here (PDF).  The commission pretty much disregarded it in the first instance but pressure from our Prime Minister and others saw large chunks of it make its way into the previous summit's communiqué. In the European Parliament, I have been working closely with MEPs from those countries that signed the letter to ensure that we maintain pressure on the commission to deliver it. They cannot keep falling back on the EU2020 strategy. If they do, it will fail – just as the Lisbon Strategy failed.

The EU-wide Financial Transaction Tax

Following our debate in the parliament, it seemed that there was resounding agreement that we all want to see economic growth and more jobs. Unfortunately, there was very little agreement as to how we deliver it!

This was exposed quite clearly the following day when the parliament debated and voted on a Europe-wide Financial Transaction Tax. Thankfully the parliament does not have any formal say over the introduction of such a tax because it requires unanimity in the council. But MEPs do have to be 'consulted'. The debate was lively. Particularly when UKIP MEP Godfrey Bloom (quite rightly) lambasted the tax, only to be reminded by Vicky Ford that when the committee first voted on the subject two years ago, he and his other UKIP colleagues were so exercised about it that they didn't turn up.

My colleague Kay Swinburne succinctly set out the knock-on effect this tax would have on savers and investors and my Czech colleague Ivo Strejcek gave an excellent speech on the real reason behind the proposal, namely to raise direct taxation for the EU.

Suffice it to say that the parliament endorsed the tax. However, there were 150 MEPs who voted against and around another 50 that abstained. That's significantly more people than when we held a similar vote a few months ago. And, besides, the result was somewhat elementary anyway as David Cameron has already said that he will use his veto on any EU-wide FTT. Thank God we never gave up that particular veto. Nevertheless, there are actually a number of countries that would support us, but it seems that they are relying on us to do the dirty work and wield the veto. Still, I somehow doubt the idea of having to veto an EU FTT keeps the PM up at nights!

Crisis, what crisis?

Other than those two debates, it was a relatively quiet week in Strasbourg. Dan Hannan has already blogged about how, looking at the agenda, you'd hardly know there was a crisis on. It's a strange feeling around the parliament at the moment. In public, everyone is saying that we must save the Euro, that Greece must not leave. In private, you struggle to find many people who do not accept that Greece leaving is probably the least worst option available now.

Greece and Germany both have choices to make. The fundamental question that both countries need to ask is whether they are prepared to pay the huge political and financial price of keeping the Euro zone at its current size. Something has to give. Spain's banking system is teetering on the edge. It is breaking its back trying to meet the three percent deficit target, rather than focusing all of its efforts on its banks. The ECB has pumped liquidity into the system but it was only ever going to be an expensive sticking plaster.

We are all suffering because Europe's leaders misled us in the past. They told us this was a simple currency union rather than a political union with a strong central bank. But that is what they now want it to become. Greece's leaders massaged their figures to achieve entry into the Euro. Had Germans known half of what was in store for them, they would never have accepted giving up the Deutschmark. It is no suprise that today they are very reluctant to become the paymasters of Club Med.

But we are where we are. And either Germany steps up to the plate, or Greece should devalue outside the single currency. Greece is still the lightning rod and it cannot continue to face this uncertainty about its future. None of the past 22 summits has had any real impact. The next 22 won't either unless Germany or Greece finally make up their mind. Europe is currently engaged in the biggest and most expensive game of chicken in history.

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