ECONOMIC REVITALIZATION OF EUROPE
IN A SOCIALLY INTEGRATED FRAMEWORK
A. ECONOMIC AND MONETARY UNION
I. The scenario for the changeover to the single currency
- The European Council confirms that 1 January 1999 will be
the starting date for Stage 3 of Economic and Monetary Union,
in accordance with the convergence criteria, timetable, protocols
and procedures laid down in the Treaty.
The European Council confirms that a high degree of economic
convergence is a precondition for the Treaty objective to create
a stable single currency.
- The name of the new currency is an important element in the
preparation of the transition to the single currency, since it
partly determines the public acceptability of Economic and Monetary
Union. The European Council considers that the name of the single
currency must be the same in all the official languages of the
European Union, taking into account the existence of different
alphabets; it must be simple and symbolize Europe.
The European Council therefore decides that, as of the start
of Stage 3, the name given to the European currency shall be Euro.
This name is meant as a full name, not as a prefix to be attached
to the national currency names.
The specific name Euro will be used instead of the generic
term "ECU" used by the Treaty to refer to the European
The Governments of the fifteen Member States have achieved
the common agreement that this decision is the agreed and definitive
interpretation of the relevant Treaty provisions.
- As a decisive step in the clarification of the process of
introduction of the single currency, the European Council adopts
the changeover scenario attached in Annex 1 which is based on
the scenario elaborated at its request by the Council, in consultation
with the Commission and the European Monetary Institute. It notes
with satisfaction that the scenario is compatible with the EMI
report on the changeover.
- The scenario provides for transparency and acceptability,
strengthens credibility and underlines the irreversibility of
the process. It is technically feasible and aims to provide for
the necessary legal certainty, to minimize adjustment costs and
to avoid competitive distortions. Under the scenario, the Council,
in the composition of Heads of State or Government, will confirm
as early as possible in 1998 which Member States fulfil the necessary
conditions for the adoption of the single currency. The European
Central Bank (ECB) will have to be created early enough so as
to allow preparations to be completed and full operation to start
on 1 January 1999.
- Stage 3 will begin on 1 January 1999 with the irrevocable
fixing of conversion rates among the currencies of participating
countries and against the Euro. From that date, monetary policy
and the foreign exchange rate policy will be conducted in Euro,
the use of the Euro will be encouraged in foreign exchange markets
and new tradeable public debt will be issued in Euro by the participating
- A Council Regulation, whose technical preparatory work shall
be completed at the latest by the end of 1996, will enter into
force on 1 January 1999 and provide the legal framework for the
use of the Euro, which, from this date, will become a currency
in its own right, and the official ECU basket will cease to exist.
This regulation will establish, as long as different monetary
units still exist, a legally enforceable equivalence between the
Euro and the national units. The substitution of the Euro for
national currencies should not of itself alter the continuity
of contracts, unless otherwise provided in the contract. In the
case of contracts denominated by reference to the official ECU
basket of the European Community, in accordance with the Treaty,
substitution by the Euro will be at the rate of one to one, unless
otherwise provided in the contract.
- By 1 January 2002 at the latest, Euro banknotes and coins
will start to circulate alongside national notes and coins. At
most 6 months later, the national currencies will have been completely
replaced by the Euro in all participating Member States, and the
changeover will be complete. Thereafter, national banknotes and
coins may still be exchanged at the national Central Banks.
- The European Council calls on the ECOFIN Council to speed
up all the additional technical work necessary to implement the
changeover scenario adopted today. The labelling of Euro banknotes
and coins in the different alphabets of the Union will also be
II. Further preparation of Stage 3 of EMU
Durable economic convergence
Budgetary discipline is of crucial significance both for the success
of the Economic and Monetary Union and for the acceptance of the
single currency by the public. It is therefore necessary to ensure
that, after moving to Stage 3, public finances are kept on a sound
track in line with Treaty obligations.
The European Council notes with interest the Commission's intention
to present in 1996 its conclusions on ways to ensure budgetary
discipline and coordination in the monetary union in accordance
with the procedures and principles of the Treaty.
The relationship between Member States participating in the Euro
area and nonparticipating Member States
The future relationships between Member States participating in
the Euro area and nonparticipating Member States will have to
be defined prior to the move to Stage 3.
The European Council requests that the ECOFIN Council, together
with, in their respective fields of competence, the Commission
and the EMI, study the range of issues raised by the fact that
some countries may not initially participate in the Euro area.
In particular, the study should cover those issues related to
The European Council requests the ECOFIN Council to report on
the two foregoing questions as soon as possible.
Work on both questions should respect the Treaty requirement that
Member States entering the Euro area after 1999 should be able
to do so on the same terms and conditions as those applied in
1998 to the initial participating Member States.
B. BROAD ECONOMIC POLICY GUIDELINES
The European Council reiterates the need to maintain a high degree
of convergence between Member States' economies on a durable basis,
in order both to create stable conditions for changing over to
the single currency and to secure smooth functioning of the internal
market. In that connection, it approved the Council report on
the implementation of the broad economic policy guidelines adopted
in July 1995.
- The European Council reaffirms that the fight against unemployment
and for equal opportunities is the priority task of the Community
and its Member States.
The medium-term strategy outlined in Essen and confirmed at Cannes
provides the appropriate framework for developing the measures
agreed. These measures have already begun to apply in the Member
States with generally positive results, thanks mainly to an appropriate
combination of structural measures and policies favouring sustained
The European Council welcomes the Commission's interim report
and assessment of the mutually beneficial effects of greater coordination
of the Union's economic and structural policies. It requests
the Commission to submit its final report at the European Council
meeting in December 1996.
- The European Council is pleased with the way in which the procedure
for monitoring employment provided for in Essen, based on a strategy
of cooperation between all those involved in this common endeavour,
has been formulated and put into practice for the first time:
- the Member States have translated the Essen recommendations
into multiannual employment programmes incorporating innovative
measures which have already started to bear fruit and which are
the appropriate instrument for transposing the recommendations
to be adopted by the Council in the socio-economic area;
- the job-creation strategy in the European Union will receive
a new impetus with the approval by the European Council of the
joint report submitted by the Council (ECOFIN and Labour and Social
Affairs) and the Commission (Annex 2). For the first time a convergence
of views has been achieved on the approach to be followed to ensure
that the current economic recovery is accompanied by a more thoroughgoing
improvement in the employment situation.
The approval of that report fulfils the Essen instructions on
monitoring employment and consolidates the employment policies
agreed at previous European Council meetings. With the cooperation
of all parties involved, new steps are being taken not only towards
identifying the obstacles in the way of reducing unemployment
but above all in connection with the macroeconomic and structural
aspects which substantially favour the creation of new jobs;
- it welcomes the fact that, in their Declaration from the Social
Dialogue Summit in Florence, the social partners at European level
arrived at a common criterion for measures to promote employment.
Similarly, it is pleased to note the broad degree of convergence
between this agreement by the social partners and the criteria
in the single report;
- within this same line of involvement of the various players
and institutions operating within the European Union, the European
Council has examined with great interest the European Parliament
Resolution on employment, observing here too the broad convergence
between that Resolution and the single report.
- On the basis of the recommendations in the single report, the
European Council urges Member States to regard as priorities the following spheres
of action in their multiannual employment programmes:
- stepping up training programmes, especially for the unemployed;
- rendering business strategies more flexible in areas such as
the organization of work and of working time;
- ensuring a pattern of non-wage labour costs appropriate to
- continuing the current wage restraint by linking it to productivity,
as an essential element in promoting intensive use of manpower,
- obtaining the maximum level of efficiency in social protection
systems so that, while maintaining where possible the level attained,
they never act as a disincentive to seeking work;
- pressing for greater conversion of passive policies to protect
the unemployed into active job-creation measures;
- substantially improving the machinery for information between
those providing and those seeking employment;
- promoting local employment initiatives.
The above measures will be applied with particular emphasis on
those categories requiring special attention, such as young people
seeking their first job, the long-term unemployed and unemployed
As regards measures on wage restraint, it recalls that such action
falls within the social partners' own sphere. The development
of social security contributions points to the need to act within
a margin for manoeuvre which will preserve the financial stability
of social protection systems.
The degree of application of the multiannual employment programmes
and the recommendations adopted in Madrid will have to be reviewed
at the European Council meeting in December 1996, with the aim
of reinforcing the employment strategy and adopting further recommendations.
- The European Council reiterates the need to ensure economic
growth which generates more employment and urges Member States
to persevere with policies in line with the broad economic policy
guidelines, backing them up with the structural reforms already
initiated or awaiting application, with the aim of eliminating
existing rigidities and achieving better operation of labour markets
in the goods and services sectors.
Maximum advantage must be taken of the opportunity offered by
the current phase of economic expansion to achieve additional
progress in the structural reforms required.
- The European Council emphasizes lastly the important job-creation
role played by internal policies, especially the internal market,
environment policy, SMEs and the trans-European networks.
- Members of the European Council that participate in the Agreement
annexed to the social protocol to the Treaty note with satisfaction
that for the first time an agreement has been reached with the
social partners in the framework of that Agreement, in connection
with the draft Directive on combining working and family life
(parental leave). It hopes this agreement will open the way for
subsequent agreements in other important social and employment areas.
- Lastly, in order to ensure the continued success of this strategy,
it requests the Council (ECOFIN and Labour and Social Affairs)
and the Commission to monitor the application of those programmes
continuously and to submit a further joint annual report for its
meeting in December 1996. So as to facilitate practical application
of the employment monitoring procedure decided on in Essen, it
is necessary to establish as soon as possible the mechanisms envisaged
in the joint report (stable structure and common indicators).
The European Council reaffirms its determination to continue
to give the objective of job creation maximum priority in the
European Union in the years to come.
D. OTHER POLICIES
The European Council takes note of the Commission report on the
internal market and welcomes the agreements reached on a significant
number of proposals and the adoption of a new procedure for notifying
national measures which could hinder the free movement of goods,
thus ensuring effective application of the principle of mutual
The European Council took note of the CIAMPI report on competitiveness
and instructed the Council to examine it.
The internal market must benefit its citizens and integrate them
to the full, through the application of the Treaty provisions
on freedom of movement, better protection for consumers, an improvement
in the social dimension and the development of mechanisms to inform
citizens of the advantages they can obtain from the internal market
and to gain a better understanding of their needs.
The European Council stresses the importance of completing the
establishment of the internal market by introducing greater competition
in many sectors in order to improve competitiveness with a view
to job creation. In this connection the European Council reaffirms
its 1995 Cannes conclusions regarding the need to make that objective
compatible with the performance of tasks of general economic interest
specific to the public services. In particular, it is necessary
to ensure equal treatment for citizens, uphold requirements as
to quality and continuity of services, and contribute to balanced
The European Council confirms that trans-European networks can
make an essential contribution to competitiveness, job creation
and the cohesion of the Union. It takes note with satisfaction
of the Commission report and of progress recently achieved in
this area. It calls upon the Council and the Parliament to complete
the legislative framework rapidly and upon Member States to give top priority to the effective implementation
of projects and, in particular, those identified by the European
Council as being of special importance.
The European Council requests the ECOFIN Council to adopt, on
a proposal from the Commission, the necessary decisions to complement
the financial resources currently available for the TransEuropean
The European Council took note of the Commission report on the
role played by SMEs as a source of jobs, growth and competitiveness,
which points in particular to the need to:
- simplify administrative formalities;
- ensure better access to information, training and research;
- remove obstacles affecting SMEs within the internal market and
promote their internationalization;
- improve the financial environment for them by means of better
access to capital markets and encourage development of the European
Investment Fund function with regard to SMEs.
The European Council urges the Commission to put these aims into
practice as swiftly as possible in the framework of the next integrated
programme for SMEs.
The European Council welcomes the clear and decisive role the
Union has been playing internationally in defence of the environment,
especially in the control of transboundary movements of hazardous
wastes and their disposal (Basle Convention), biological diversity,
substances that deplete the ozone layer (Montreal Protocol) and
other subjects dealt with at the Third Pan-European Conference
of Environment Ministers.
The European Council notes with satisfaction the important agreements
reached in the context of that policy and the debate on a new
integrated approach centring not only on the quality of water
but also on its scarcity as a limited economic and environmental
The European Council welcomes the progress of work on the reforms
of the common market organizations (CMOs). It urges the Council
to ensure that the common organization of the market in rice is
adopted before the end of the year and the common organization
of the market in wine as soon as possible. It asks the European
Parliament to deliver its Opinion on the proposed reform of the
common organization of the market in fruit and vegetables with
a view to its adoption at the earliest opportunity.
The European Council notes that Council proceedings have resulted
in full compliance with the instructions given by the European
Council at Essen, leading to full integration of Spain and Portugal
into the common fisheries policy.
[Madrid European Council]