Danish PM says EU needs competitiveness pact

Updated: 2011-02-09 14:56


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COPENHAGEN -- Danish Prime Minister Lar Lokke Rasmussen said Tuesday that Europe is facing a competitiveness problem and there is the need to establish a pact for competitiveness.

"Denmark will say yes or no to a possible new Euro pact on competitiveness later ... but we must already now take part in the process of designing the new covenant, because of its importance for Denmark as well," Rasmussen told reporters at his weekly press conference at Christiansborg, the Danish Parliament.

The prime minister was referring to a package of initiatives proposed by France and Germany at a European Union summit in Brussels on Friday, which discussed ways to boost competitiveness in Europe.

"There is no doubt that Europe is facing a competitiveness problem," Rasmussen said, adding that Denmark needed to work in partnership with other European states to boost growth and sustain welfare on the continent, although "the solutions are not always popular."

"The Danish government decided to proceed with the process of influencing and shaping the future agreement," said Rasmussen.

The proposed initiatives to boost European competitiveness include limits on debt levels that will be written into national laws, a higher retirement age, a minimum corporate tax rate, a unified crisis-resolution mechanism for banks, and the abolition of wages that rise along with the rising cost of living.

The package also wants to increase the lending capacity and flexibility of the European Financial Stability Facility, a 440- billion-euro fund that was established in May 2010 to help bail out eurozone members facing a sovereign debt crisis.

The pact is strongly backed by France and Germany, the driving forces of EU policy.

"We want to send out a clear message, that as the European Union, we intend to grow together," German Chancellor Angela Merkel told reporters at the summit last week. "What we want to establish is a pact for competitiveness."

But the proposed pact has already been criticized by smaller eurozone members for trying to impose a one-size-fits-all policy.

However, Rasmussen believes that being a "small, open economy" that is closely tied to the eurozone, Denmark has a strong interest in the proposed Euro initiative.

He stressed that there is common focus on the reform of public sector finances and of welfare systems across the European Union.

Many of the steps taken to address the crisis in the eurozone, such as improving job-market flexibility, are in line with Denmark's own policies, he noted.

Denmark is an EU member state, but stays out of the eurozone, retaining the use of the Danish kroner.


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