The art of the boost

20 November 2008 By Pierre Briancon

A coordinated antirecession effort from the EU would be welcome, if it demonstrates unity, resolve and a carefully targeted mix of tax cuts and spending. German reluctance can be overcome if other member countries pledge to restore fiscal discipline when good times return.

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Michael Glos, Germany's economy minister, this week said that the European Union is drawing up a E130bn economic stimulus package to help the region's economy fight the global downturn. The plan, which would amount to about 1% of the zone's GDP, would leave it up to governments to adopt the means they see fit to boost their national economy.

The EU commission should present its plan November 26, and EU leaders will be asked to take the final decision when they meet in Brussels December 10.

Some economists from the Brusselsbased Bruegel think tank have advocated a Europeanwide stimulus package that would include a 1% cut in VAT rates.

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