Resolution n 1 adopted by the EPP Congress, Marseille (France), 7th-8th December 2011 Combating the Crisis and Winning

the Future Transforming the European economy into a worldwide competitive knowledge economy and into a 500 million strong consumers market, where products and services can circulate freely, are among the most important challenges in the future for the European Union. Only by decisive reforms for increased growth, making the European Union the worlds biggest economy with the most dynamic markets, can the EU tackle the debt crisis and re-gain global leadership. Economic growth based on increased competitiveness must be the primary way to combat the economic shortcomings we are facing. The EPP firmly believes that the social market economy requires reforms for new jobs and stable public finances. The EU is an economic and a societal project. The social market economy places both market and government function at the service of society, thereby promoting economic growth, social justice and poverty reduction. While Europe might be lagging behind other global actors in some respects, the European Union is de facto the biggest economy in the world. As such it does have the biggest opportunities and the biggest challenges. Europe has all the reasons to be optimistic, but that requires a willingness to change, reform and innovate in order to make the best use of our opportunities and advantages. We believe knowledge, entrepreneurship, social cohesion and innovations will be crucial for leadership, prosperity and social security in a global context. Given recent economic developments, and the fact that European citizens, businesses and financial entities expect European institutions to provide comprehensive answers to tackle the causes of the recent economic crisis, the EPP is ready to assume a leading political role. We are aware of our particular responsibility that derives from the fact that the EPP represents the largest political force in all institutions of the European Union. We, therefore, recognise that the following measures should be swiftly enacted in cooperation with the national governments and the appropriate international institutions: Economic Governance The economic and financial crisis is a challenge for the whole European Union. Europe's economy must be reformed to create stability and competitiveness; thereby securing jobs, social welfare and prosperity. This is a common challenge, which requires common rules and a binding framework for fiscal discipline and actions for growth. The EPP is strongly in favour of stringent and efficient fiscal surveillance and economic coordination for all Member States in order to achieve stable public finances. We call for the immediate implementation of the reinforced Stability and Growth Pact (SGP), which should include automatic sanctions, stronger independent surveillance mechanisms of macroeconomic imbalances and, starting now, efforts to reduce deficits and debt burdens in line with the legislated requirements. In order to reduce deficits and restore confidence in European public finances, each Member State 1

must take action now. A mechanism, which reduces EU funding for Member States that run up excessive and persistent budget deficits could also be envisaged. The SGP should go beyond monetary and economic fines, have a strong sanction system and be subject to judicial control. A stronger preventive and corrective arm of the SGP is indispensable for sound and prudent fiscal policies in the Member States. Adherence to the European Semester framework is of outmost importance if inconsistencies and emerging imbalances are to be detected. Binding commitments for all Member States in order to reform and vitalise the economies, as envisaged in the Euro Plus Pact, are necessary in order to revive the European economy. We view this, together with competitiveness and economic convergence aiming for the highest standards, as a key requirement for the monetary union to function properly in the long term. The EPP is also in favour of deepened economic integration to provide additional support to the monetary union. The EPP believes that long term sustainability of public finances is essential for stability and economic growth. Excessive levels of debt create additional macroeconomic vulnerabilities and limit governments options to intervene in support of the economy. Actions must be taken now in order to reduce deficits and restore confidence in European public finances. Unsustainable levels of debt undermine welfare, investment opportunities and prospects for future growth. Reduced deficits must be combined with reforms to increase competitiveness and strengthen our social market economy. This can be combined with other efforts aimed at stimulating the economy, such as improved preconditions for investments, and an improved and developed internal market, which aims to provide opportunities and lead to increased and socially sustainable competitiveness. The SGP must be complemented by rules calling for balanced budgets over the business cycle. All Member States should comply with balanced budget requirements throughout the business cycle. Against this background, the EPP welcomes the budget consolidation measures announced by many Member State governments and strongly underlines the crucial need for continued actions in that direction. Economic governance is a precondition for the European social model. Structural reform should also rely on concrete actions to stimulate employment and social inclusion. A strengthening of the European economic and monetary system needs to be complemented with a new and constructive societal agenda. Furthermore, we recommend the introduction of clauses calling for limits to public debt in Member States constitutions. Jobs and Growth We recognise that obstacles to the EU's Single Market, especially in the service sector, are a major obstacle to jobs and growth in Europe. Removing bottlenecks in the functioning of the internal market is among our priorities. Businesses and entrepreneurs must be given a real possibility to scale up and sell services and products to the EUs 500 million consumers, which form the largest economy in the world. The rights of European workers must be safeguarded. Economy should never be seen as separate from society. Growth is the tool to secure and enhance the sustainability of European welfare states and to deal with the new major challenges that come with globalisation. The EU should stimulate and encourage SMEs and entrepreneurship, which are crucial for jobs and growth. Rules should be simplified and the SMEs should be given real opportunities to grow by commercialising their products and services freely across the Unions internal market. Proper market 2

access and affordable Intellectual Property Rights for both SME's and larger companies will increase the incentive for profitable innovation. This will also support Open Innovation by disclosing and defining the contribution of each actor, as well as by ensuring a fair reward for that contribution. We must ensure that SME's can operate all over Europe by granting them access via mutual recognition, reduction of red tape and establishing a 'one-stop-shop' for VAT, as well as improving access to finance for SMEs. We should ensure the EU remains fiscally competitive for entrepreneurs and innovators. With the aim of fostering self-employment and entrepreneurship as a fundamental axis for job creation and the European articulation of the real productive economy, the European People's Party will support the Project for a Self-Employed Statute. The projects' main objectives will be to provide systematic and unified regulations for self-employment in the European Union, to support the improvement of social and labour rights for entrepreneurs, and to articulate the necessary measures to support business start-ups, the sustainability of these companies and the preservation of preexisting businesses. These measures will be particularly geared towards these businesses' financing needs, their difficult access to credit, fiscal matters and the struggle against unpaid bills. The EPP supports a common system for calculating the tax base of businesses operating in the EU, as this reduces the administrative burden, the compliance costs and legal uncertainties of businesses operations in more than one Member State. We support its business-friendly character, especially for SMEs and do not envisage additional tax harmonisation by this measure. Competition should remain socially sustainable, precluding harmful competition between European workers, which leads to the erosion of their welfare and social standards. Labour markets need to be reformed in order to get a greater number of people to work more and at an older age. The reform of pension systems should respect the dignity of workers and should not lead to the impoverishment of the elderly. We regard active ageing as an important step for quality of life; as well as enabling wider reform of the pension systems, aimed at improving the status of public finances in our Member States. Demographic changes should be looked at as an opportunity, which can bring innovative solutions to current economic and social challenges. We need the participation of experienced workers to support our economies. Social protection systems should be modernised and fully deployed to ensure adequate income support and services with a link to economic growth whilst remaining financially sustainable and encouraging participation in society and in the labour market. We believe there should be a correlation between career length and pension entitlements. Initiatives to increase retirement age need to be accompanied by actions of economy, state and social partners to create suitable jobs. Getting more people to work also means that efforts in the fight against youth unemployment should be stepped up significantly. Young people are particularly vulnerable to the consequences of economic downturn. Improving young Europeans transition from school to a qualitative working life is an essential tool to guarantee a dynamic and socially inclusive and coherent economy.We are ready to address the shortage of highly-skilled workers through labour mobility. Remaining legal barriers that hinder labour mobility across all EU Member States must be removed. In line with the EU 2020 Strategy, we aim to encourage economically motivated labour mobility and Stimulate European workers to move from slow-growing economic regions to faster-growing areas. Given the large difference in unemployment levels across the Union, this would help to reduce labour market 3

mismatches in Europe as a whole. We recommend a common policy at EU level, within the provisions of the Justice and Home Affairs policy area. Furthermore, we should provide conditions to facilitate young people and women entering and (re)entering the labour market. We shall enable them to reconcile family and professional life. The free movement of services, knowledge oriented services at the least, must be encouraged by, for example, extending and fully implementing the Service Directive. Today, the services sector represents 75-80% of the EUs total production and accounts for 70% of the Unions GDP. It is the only sector of net job creation in the EU. However, it is strongly fragmented, as only 20% of the services provided in the EU have a cross-border dimension. Creating a Digital Single Market is crucial, since it can be a driver for competitiveness and economic growth, providing highly-qualified jobs. By breaking down barriers for European companies and entrepreneurs, the digital economy can act as a spearhead for achieving a competitive Single Market. We also recognise that poor Intellectual Property Rights enforcement negatively affects EU trade. By linking the digital agenda with the development of e-commerce and new services such as e-health, etrade, e-banking and e-learning Internet; the digital infrastructure can be pivotal in opening up the internal market. The Single Market should be opened up to global trade and investments, in order to attract capital and new ideas to Europe. The WTO Doha negotiations should be completed as soon as possible and any protectionist measures must be avoided by all parties. Of equal importance is the EU continuing its policy of completing free trade agreements with relevant economic partners. Free trade and access to global markets is an important catalyst for jobs and growth and a decisive factor enabling European companies to become world leading. The ambition to increase growth calls for an intensification of transatlantic relations and the creation of a barrier-free transatlantic market. Innovation, Research and Knowledge Society Transforming the European economy into a worldwide competitive knowledge economy is one of the most important challenges for the European Union in the years to come. Know-How is central to economic growth and job creation and we must, therefore, create the best conditions for transforming our society into a knowledge society. Research and innovation, especially centres of excellence and frontier research are key elements in this respect. High-quality education, as well as increased mobility for students and researchers, is crucial for improving the competitiveness of the European economy. We need to intensify collaboration between European researchers by introducing a research voucher scheme with money for research following researchers that move to universities and research institutes in all Member States, supporting increased collaboration between European researchers. Researchers and innovators must be able to work and cooperate across the EU as easily as within national borders. An effective European research area should be put in place as a matter of priority. The free movement of knowledge oriented services, which have a strong leveraging effect on economic growth, must be particularly encouraged by fully implementing the Service Directive and expanding it to new sectors; in order to embrace and stimulate a fast changing economy. We also need to foster cooperation between universities, research institutes and industries, stimulating 4

applied research and faster practical implementation of research results and innovations. Effective training and education, closely linked to the labour market to reflect its needs and directed at knowledge areas with high economic potential, can help reduce skills mismatch between labour market and labour supply; especially for people (re) entering the job market. We also aim at the mutual recognition of diplomas and professional qualifications. We commit ourselves to further promote competent female researchers, particularly in those sectors where they have a competitive advantage and a proven track record. We also aim at improving research conditions for young researchers, to attract high-quality young research to Europe. The Unions budget should be reformed to better reflect the financial needs associated with tackling 21st Century challenges. EU funding should support the development of a knowledge-based economy and contribute to the development of adequately skilled European human capital. Spending shall be primarily allocated to areas, which stimulate economic growth and competitiveness, such as innovation and research & development, as well as territorial cohesion. Therefore, we recommend EUs spending on research and development should be doubled. The EPP calls for increasing the added value of investments, in skills, vocational training and workers learning, provided by the European funds, especially the ESF. All European workers, but in particular lower-skilled categories, should receive appropriate and tailored lifelong training adjusted to their needs and potential, in order to enable them to benefit from a knowledge intensive economy and to avoid social exclusion. In this context flexicurity should be a driving principle. We shall also respond to changing needs, in terms of skills, as a consequence of new work environments and processes. Cohesion and Regional Development We are of the view that bringing European citizens closer to one another, economically as well as socially and culturally, is the core idea of cohesion and, therefore, an indispensible part of the European Project. Mutual solidarity is one of the very cornerstones of the European Union and our common dedication to this idea is firmly manifested through the various cohesion projects. Cohesion, as investment policy, has proven of particular value and has had a leverage effect for the development of the EU. A Union with open borders, mobility and common markets creates a more level playing field where preconditioned cohesion policies focus on crucial factors for competitiveness, knowledge economy and entrepreneurs. We believe that long-term cohesion comes from competitiveness, calling for the empowerment of all parts of Europe to take part in the Single Market and common efforts to invest in the future. Public funding as an investment can only help to create some preconditions for growth and we reiterate the fact that open borders, competition, dynamic markets, modern infrastructure, broadband and research are crucial factors for competitiveness and development. Therefore, we call for cohesion policy to focus on the future structures in these areas, and on the facilitation of the necessary structural changes. The EU and the Member States have to ensure appropriate ownership and involvement of regional and local authorities, as they are legally responsible to deliver cohesion policy measures at ground level. 5

Cohesion Policy should continue to target, as a paramount priority, those regions that lag furthest behind. Decreasing transitional measures for regions that drop out of the funding in the next multiannual financial framework after 2013 must be taken into account. Structural funds and associated Union programmes must primarily be used to support new future-oriented opportunities and secure the long-term development of less economically strong regions. In order to achieve this, it is important to ensure that targeted funding of cohesion policy remains a priority in the 2014-2020 multi-annual financial framework, with the GDP remaining the main criterion, and a significant share of the financial means allocated through the cohesion projects should continue to be directed to investments in infrastructure and higher education. Budget resources, which are allocated to the Common Agricultural Policy within the next Multiannual Financial Framework, should increase the competitiveness of the agricultural sector and continuously support the process of structural transformation, restructuring and modernisation of the rural areas; whilst at the same time transforming the sector into a knowledge driven one. Budget allocations shall stimulate the dissemination and development of innovations to rural areas, including the issue of social innovations. The Unions control systems shall not only assess the legality and regularity of the projects financed by EU funds, but also measure their effectiveness more closely and lay greater emphasis on conditionality. The EPP firmly supports an increase in the effectiveness of EU fund management, thus simplifying rules for final beneficiaries of EU funds, less complicated administrative structures. Cohesion and structural policies need to be flexible, efficient and successful, especially in periods of severe economic downturn; underlining the need for criteria, which ensure that the goals and aims of the funding are achieved. Concluding Remarks Making Europe a leading economy and fostering competitiveness and prosperity is a precondition for new jobs and social security, as well as a truly integrated European Union. But it is the precondition for even more. It is crucial in order to make European values the centre for global political development. There is more at stake than prosperity. Defending human dignity and human rights, in a world where democracy and open societies cannot be taken for granted, demands a strong Europe. A strong Europe is leading the way to a better world.