EU to fund €55bn reforms in anti-austerity move against jobless surges

Brussels proposed on Thursday funding two financial instruments worth €55bn to back reforms in EU member countries to fight against the financial crisis and surges in joblessness, Reuters reported.

The plans had taken form against the backdrop of rising political uncertainty in Italy and concerns regarding the future of the single currency.

The first of those two measures, worth €25bn, would be made available from 2021 to 2017 for member states that have previously agreed with the EC on new pension plans or labor market regulations.

However, the two instruments would first require the approval of all 27 member EU states.

The second facility, the European Investment Stabilization Function, would provide up to €30bn in loans to member states hit by a sudden economic crisis leading to a surge in unemployment.

By allowing investment to continue during periods of financial stress, it was hoped it would help avert recessions.

Indeed, increased unemployment could easily stoke euroscepticism, as seen in Italy, where unemployment had been running at double-digit rates since the 2012 debt crisis.

The money would be raised by the EU from financial markets, with the bloc's €1trn being used as a guarantee.

"Around half" of the EU's countries would have benefited from the facility had it been in place during the past financial crises, Commission Vice President Valdis Dombrovskis told Reuters.

The new credit lines may also prove a useful 'carrot' when trying to maintain member states' discipline when asked to tighten their belts by the Commission, since only those who followed the reforms would be eligible to receive funding.