To defeat Putin, we must shield Europeans from the shockwaves of the war [Promoted content]

The Russian war against Ukraine will inevitably result in a severe economic shock of uncertain magnitude in the European Union. Rapid increases in food and energy prices are affecting the most vulnerable Europeans, aggravating energy poverty and worsening living conditions.

MEPs Pedro Marques and Biljana Borzan are S&D Vice-Presidents. MEPs Agnes Jongerius and Jonas Fernandez are S&D MEPs and the main negotiators on the resolution.

The economic forecast presented by the European Commission in May clearly illustrates the negative impact of the war on our economy – growth is slowing down significantly and inflation has reached record levels not seen since the introduction of the single currency.

This bleak picture calls for immediate action. We, the Socialists and Democrats, who have long been fighting for a fairer Europe, are now determined to take the lead in the efforts to shield European citizens, in particular the most vulnerable people, against the shockwaves from the war.

We owe it to the Ukrainians. If we do not remain strong and united, we will not be able to help them. We owe it to our citizens, as we promised them we would defend our values. The lack of a European response to the recent financial and migration crises has taught us a painful lesson: only populists and destructive forces benefit when the EU does not act.

The European Parliament’s resolution, adopted in May, is the first step, with several concrete objectives and ideas. We will strive to realise them. We are calling on the European Commission and the EU member states to take them on board immediately and to make them a clear priority.

The Commission has so far chosen to talk about sanctions and the reconstruction of Ukraine. These are very important priorities, but to keep the support of Europeans, carry through these priorities and prevent the rise of populism, we must protect people from the repercussions of the war.

Keep the European fiscal rules flexible

The first thing to do is to keep maximum flexibility in the European fiscal rules as long as needed to allow an effective response to the evolving economic situation. This is made possible through the “general escape clause”, which allows deviation from the European fiscal rules in case of a major economic downturn.

The EU introduced the general escape clause with the 2011 budgetary reform as a response to the financial crisis, but only activated it in March 2020 to allow governments to respond to the Covid-19 pandemic.

Now, as then, Europe is experiencing a severe economic downturn and facing major uncertainties, so the need to extend the general escape clause throughout 2023 is obvious.

The Commission made the right decision to propose a one-year extension to this clause, but the sheer fact that some Commissioners were reluctant to do so is a signal that not everyone learned the lessons from the failed policies adopted in response to the financial crisis, nor from the good ones that kept our economies afloat during the Covid crisis.

Set up a new social resilience package to help European citizens and refugees

Our group has also worked hard to include a call for a temporary European social resilience package, with targeted support for the most vulnerable Europeans by summer 2022.

This set of initiatives includes the extension and strengthening of the SURE instrument, designed as a response to the coronavirus pandemic to protect jobs. We are also calling for additional funding for the European Child Guarantee to ensure there is support for Ukrainian children and help with the reception and integration of refugees into our societies.

To have a meaningful debate on all these initiatives, we need to organise a new social summit to build on the one in Porto last year, agree new concrete actions and actually fulfil the ambitious objectives that we defined then. This is an unprecedented situation calling for unprecedented measures.

More money needed – windfall profit tax one option

To finance these necessary and unprecedented measures it is not enough to reallocate existing funds such as the unspent €200 billion from the loans planned in the recovery and resilience fund. We need more money.

The Bruegel Institute estimates that for every million refugees we need €10 billion per year to support them and ensure decent living conditions, such as access to housing, education and the labour market.

We suggest two possible new sources for the European budget: the much-discussed financial transaction tax, with a long history, and a windfall profit tax, setting higher tax rates for the windfall corporate profits of large multinationals, in particular in the energy sector.

It is unacceptable that poor people cannot afford to heat their homes while rich companies are gaining huge profits as a result of unexpectedly favourable circumstances, such as the current high energy prices.

Based on the Italian experience, where the government expects to collect around €11 billion this year from a 25% windfall profit tax, the EU could collect from €90 to €100 billion in 2022.

This would not only allow it to finance the extraordinary measures Europe needs to address the economic and social consequences of the war, but it would also re-establish some basic social justice. This is indispensable if we want to avoid the rise of populism and to keep people’s support for solidarity with Ukraine.

In conclusion, the European Parliament, led by the Socialists and Democrats, is proposing a social, solid and realistic package to tackle the difficult situation that the EU economy is facing as a consequence of Putin’s criminal invasion of Ukraine. It is now time for the Commission and the Council to act.

Source: euractiv.com