Danish PM: austerity a 'precondition for solidarity'

Denmark's social democratic Prime Minister Helle Thorning-Schmidt has backed austerity as the "essential basis" for growth and innovation – but insisted that the burden of pain must be shared fairly. Speaking in the European Parliament in Strasbourg this morning, she said Denmark would work "tirelessly" to achieve results during its six month presidency of the Council of the European Union.

The Danish presidency is set to be dominated by the eurozone's ongoing economic woes and Thorning-Schmidt said decisive action was required to "ensure the long-term viability of the European model". She added: "No one here needs to be told that Europe is in a profound economic crisis that has rock the very foundation of our cooperation. Growth is low. Debt is high. Businesses are struggling. Jobs are being lost. Insecurity has become part of everyday life for millions of European families."

Backing the EU's austerity drive, Thorning-Schmidt remarked that spending restraint was a "precondition for dependable solidarity" and to meet the challenge Europe had to show "steady resolve in ensuring robust public finances". She said: "Ensuring robust public finances is the true bulwark against short-sighted speculation. The only sustainable future for our social market economies is to embrace change and increase competitiveness. The essential basis for that is stability that fosters growth, and opportunity that maximises innovation."

But she asserted that people would only accept "austerity with justice" and reject it when it was "manifestly unequal and unfair", adding: "The great majority of people understand that and are prepared to be part of it, if it is fairly applied. People are ready to make sacrifices – but they will not be sacrificed." Pledging that the Danish presidency would work "tirelessly" to "produce tangible, useful results", the prime minister set out the country's priorities for the next six months: a responsible European economy, creating sustainable growth, developing green research and jobs, and making sure the EU's voice is heard more clearly on the international stage.

Thorning-Schmidt said she was "a European at heart" and, as a former MEP, praised the parliament. She said: "Every day, in the political engine rooms of this house, decisions are taken that form the building blocks of tomorrow's Europe. Like in any parliament, there are lines of division and heated debates. As there should be. But what makes this assembly special is the shared commitment to Europe and its citizens that runs through the veins of the great majority of members."

Meanwhile European Commission President José Manuel Barroso said Europe needed "greater convergence, solidarity and growth" and described Thorning-Schmidt's commitment as "inspiring". He said the EU's response to the crisis must move beyond only sanctions and discipline. "The commission has been saying for years what needs to be done, but let's be frank action by the member states has been uneven and in some cases insufficient. If we are serious about overcoming the crisis, we must be serious about adding decisive action on growth to the decisive action already underway on financial and fiscal consolidation." He said growth would come from structural reforms, increased competitiveness and targeted investment.

Barroso agreed with Thorning-Schmidt that the pain of austerity had to be spread fairly. "Social justice is also a central element of our growth strategy because the sacrifices must be fairly distributed throughout society," he said. "Our crisis response is not credible without this element of social justice." During Denmark's presidency, tough negotiations will continue on the EU's nex seven-year budget, and the new fiscal compact treaty to enforce fiscal discipline in the eurozone. Barroso called on Denmark – which does not use the single currency – to "act as a bridge between the countries that are inside and those outside the euro area".

The role of the presidency is primarily to organise and chair meetings of national ministers, and set the EU's legislative agenda. However Joseph Daul, chairman of the centre-right European People's Party, said Denmark should run a political not merely technical presidency. He called on Thorning-Schmidt to "be political, because the times in which we are living call for European players not to just oil the wheels or build bridges but to be committed players who make themselves heard."

"I think the time has come for presidencies to have ambition," he said. "I believe that even if your country has not been a party of several common policies, such as monetary policy, you must be bold in you proposals and help this parliament to convince member states that the solution to our problems is more convergence and fast."

Hannes Swoboda, the new leader of the Socialists and Democrats in parliament, said Thorning-Schmidt was "absolutely right" to call for austerity measures to be implemented fairly. "We need to save money, yet this should not be at the cost of the poorest," he said. "We need to defend the European social model. Any move away from this will endanger Europe and lead to an erosion of citizens' rights and democracy."

Denmark won praise from Martin Callanan, leader of the European Conservatives and Reformists, for criticism of the proposed EU-wide financial transaction tax. Last week economy minister Margrethe Vestage said Denmark would be "very reluctant promoting something that minimises growth and slashes jobs" – and Callanan said he hoped the presidency would "continue in this vein and tell all leaders of the EU that the time has come to face the truth about the eurozone and the underlying European economic weakness".

But left-wing MEPs accused Denmark of producing "a Merkozy tract". Søren Søndergaard, speaking for the European United Left/Nordic Green Left group, said Thorning-Schmidt's government had been elected "on a promise to invest to overcome the crisis rather than engage in savage austerity" but the plans included "not investment, just cuts". He added: "The peoples of Europe need work to improve our common welfare and the Danish presidency has six months to show whether it is part of the solution or part of the problem.