BRUSSELS, Jan 26 (Reuters) – Since the start of the year, one phrase has tripped off the lips of European leaders more than any other: “jobs and growth”. After two years of debt crisis and budget austerity, there is a strong desire to shift the narrative on.

To that end, the EU’s first summit of 2012, to be held on Jan. 30, will focus on finding ways to kickstart growth and create jobs across the 27-country union, which is on the brink of recession and has average unemployment of 10 percent, rising to 45 percent among the young in countries such as Spain.

The problem is that after years of preaching austerity and telling wayward governments to cut spending and raise revenue, there is scarce capital readily available for investment, either at a national level or across the EU budget.

As a result, there is little expectation that Monday’s summit will produce concrete measures to boost either output or employment in the near-term, despite EU leaders first adopting their competitiveness mantra more than a decade ago.

“They don’t have much of a strategy apart from the typical laundry list of structural and labour market reforms, which is fine, but that is not going to deliver much in the short-term,” said Guntram Wolff, deputy director of Bruegel, a Brussels think-tank whose analysis frequently informs EU policymaking.

“It’s become clear that this focus on austerity and fiscal consolidation is not enough, so they need the economic growth and employment element. The signal is the right one, but we need to do better about how we go about achieving it.”

While there may not be readily accessible pools of capital to launch infrastructure projects or other labour-intensive schemes that can boost output, the EU does have large amounts of funds squirreled away in its long-term budget that could be released to help countries such as Greece, Spain and Portugal.

BRUSSELS (Reuters) – The world needs at least to double its spending on agricultural research if it is to produce reliable crops and improve the lives of the one billion people who battle starvation every day, Bill Gates said in an interview on Tuesday.

A day before flying to Davos to meet political and business leaders, Gates said he was concerned the austerity drive in Europe could lead to a fall in foreign aid spending, setting back the fight against poverty, hunger and disease.

While acknowledging the difficulties policymakers in the richer world face at a time of slumping growth, the world’s second wealthiest man said now was the time to invest in research and development.

“The big choice is whether the crisis in the rich-country governments will cause them to stop increasing the aid that’s been so key to reducing disease, improving food availability for the poorest, and bringing down the number who suffer from AIDS or malaria or malnutrition,” Gates told Reuters in Brussels, where he met EU officials.

Referring to agricultural research, he said it was shocking – as well as short-sighted and potentially dangerous – that only $3 billion is spent each year on seeking to improve the seven most important staple crops on which the poor depend.

“The number should easily be double what it is,” Gates said of research spending while underlining there had been an increase in investment by the private sector.

“Capitalism always has a challenge that research is not funded as well as it should be. That is, that the innovator can’t capture enough of the benefit to society. So they tend to be risk-averse, and that’s why basic research – medical basic research, agriculture basic research – has to be funded by governments.”

BRUSSELS/BERLIN, Jan 24 (Reuters) – Angela Merkel’s conservative allies warned on Tuesday against committing additional German funds to euro zone bailout schemes, underscoring how difficult it will be for the chancellor to meet international demands to boost the bloc’s defences.

International Monetary Fund chief Christine Lagarde and Italian premier Mario Monti have both travelled to Berlin to urge Merkel to increase the euro zone’s firewall by either boosting the 500 billion-euro European Stability Mechanism (ESM) or allowing it to run concurrently with the existing bailout fund it is due to replace at mid-year.

German government sources have told Reuters Merkel does not rule out such a step if the euro zone crisis deteriorates over coming months. But only the threat of a disaster may persuade her coalition to back more funds for the currency bloc.

In particular, she faces stiff opposition from the Bavarian Christian Social Union (CSU), whose leaders have flirted with euroscepticism, and the liberal Free Democrats (FDP), whose freefall in opinion polls has thrown them onto the defensive.

“The (opposition) Social Democrats would back it and she could probably get her Christian Democrats on board. But the FDP could well see it as a no go,” a senior German official told Reuters, requesting anonymity.

Euro zone finance ministers have agreed to “reassess the adequacy” of their current rescue fund – European Financial Stability Facility (EFSF) – and its successor, the ESM, in March.

And Germany is unlikely to send a clear signal about any shift in its position until then. But Lagarde sent Merkel a clear message at a meeting between the two on Sunday that G20 countries outside the euro zone would not agree to boost their contributions to the IMF unless the chancellor showed movement on the rescue funds, European sources told Reuters.

BRUSSELS, Jan 17 (Reuters) – U.S. rating agency Standard & Poor’s cut its credit rating of the euro zone’s EFSF rescue fund on Monday, and Greece was under pressure to break a deadlock in debt swap talks if it is to avoid an unruly default.

French Finance Minister Francois Baroin said there was no need to shore up the European Financial Stability Facility after S&P downgraded it by one notch to AA+ from triple-A, echoing the view of Germany, the only major euro zone member to retain a top-notch credit rating.

S&P said in a statement the decision was all but inevitable following identical cuts three days earlier to the creditworthiness of France and Austria, two of the EFSF’s guarantors.

“We consider that credit enhancements that would offset what we view as the now-reduced creditworthiness of the EFSF’s guarantors and securities backing the EFSF’s issues are currently not in place,” the agency said in a statement.

“We have therefore lowered to AA+ the issuer credit rating of the EFSF, as well as the issue ratings on its long-term debt securities.”

Financial markets, which had fallen after the mass downgrades of euro zone members on Friday, showed little reaction to the latest blow — which had been expected — and Japan, a major buyer of EFSF bonds, said they remained an “attractive” investment.

A growing number of experts, including a Standard & Poor’s official, warned that a Greek default was on the cards, after Greece’s talks with creditors broke down on Friday.

BRUSSELS (Reuters) – U.S. rating agency Standard & Poor’s cut its credit rating of the euro zone’s EFSF rescue fund on Monday, and Greece was under pressure to break a deadlock in debt swap talks if it is to avoid an unruly default.

French Finance Minister Francois Baroin said there was no need to shore up the European Financial Stability Facility after S&P downgraded it by one notch to AA+ from triple-A, echoing the view of Germany, the only major euro zone member to retain a top-notch credit rating.

S&P said in a statement the decision was all but inevitable following identical cuts three days earlier to the creditworthiness of France and Austria, two of the EFSF’s guarantors.

“We consider that credit enhancements that would offset what we view as the now-reduced creditworthiness of the EFSF’s guarantors and securities backing the EFSF’s issues are currently not in place,” the agency said in a statement.

“We have therefore lowered to AA+ the issuer credit rating of the EFSF, as well as the issue ratings on its long-term debt securities.”

A growing number of experts, including a Standard & Poor’s official, warned that a Greek default was on the cards, after Greece’s talks with creditors broke down on Friday.

Greece was under growing pressure to secure a last-ditch agreement with its private creditors to accept voluntary losses on their holdings of Greek bonds.

BRUSSELS (Reuters) – U.S. rating agency Standard & Poor’s cut its credit rating of the euro zone’s EFSF rescue fund on Monday, and Greece was under pressure to break a deadlock in debt swap talks if it is to avoid an unruly default.

French Finance Minister Francois Baroin said there was no need to shore up the European Financial Stability Facility after S&P downgraded it by one notch to AA+ from triple-A, echoing the view of Germany, the only major euro zone member to retain a top-notch credit rating.

S&P said in a statement the decision was all but inevitable following identical cuts three days earlier to the creditworthiness of France and Austria, two of the EFSF’s guarantors.

“We consider that credit enhancements that would offset what we view as the now-reduced creditworthiness of the EFSF’s guarantors and securities backing the EFSF’s issues are currently not in place,” the agency said in a statement.

“We have therefore lowered to AA+ the issuer credit rating of the EFSF, as well as the issue ratings on its long-term debt securities.”

A growing number of experts, including a Standard & Poor’s official, warned that a Greek default was on the cards, after Greece’s talks with creditors broke down on Friday.

Greece was under growing pressure to secure a last-ditch agreement with its private creditors to accept voluntary losses on their holdings of Greek bonds.

BRUSSELS (Reuters) – U.S. rating agency Standard & Poor’s cut its credit rating of the euro zone’s EFSF rescue fund on Monday, and Greece was under pressure to break a deadlock in debt swap talks if it is to avoid an unruly default.

French Finance Minister Francois Baroin said there was no need to shore up the European Financial Stability Facility after S&P downgraded it by one notch to AA+ from triple-A, echoing the view of Germany, the only major euro zone member to retain a top-notch credit rating.

S&P said in a statement the decision was all but inevitable following identical cuts three days earlier to the creditworthiness of France and Austria, two of the EFSF’s guarantors.

“We consider that credit enhancements that would offset what we view as the now-reduced creditworthiness of the EFSF’s guarantors and securities backing the EFSF’s issues are currently not in place,” the agency said in a statement.

“We have therefore lowered to AA+ the issuer credit rating of the EFSF, as well as the issue ratings on its long-term debt securities.”

A growing number of experts, including a Standard & Poor’s official, warned that a Greek default was on the cards, after Greece’s talks with creditors broke down on Friday.

Greece was under growing pressure to secure a last-ditch agreement with its private creditors to accept voluntary losses on their holdings of Greek bonds.

BRUSSELS (Reuters) – Rating agency Standard & Poor’s cut its credit rating of the European Financial Stability Facility, the euro zone’s rescue fund, by one notch to AA+ on Monday, three days after it cut the ratings of France and Austria by the same margin.

In a statement, S&P said the decision was all but inevitable following the cuts to the creditworthiness of France and Austria, which were two of the EFSF’s guarantors.

“We consider that credit enhancements that would offset what we view as the now-reduced creditworthiness of the EFSF’s guarantors and securities backing the EFSF’s issues are currently not in place,” the agency said in a statement.

“We have therefore lowered to AA+ the issuer credit rating of the EFSF, as well as the issue ratings on its long-term debt securities.

The EFSF was set up by the 17 governments that share the European single currency in May 2010 and has so far been used to provide emergency loans to Ireland and Portugal. It is also expected to contribute to a second bailout of Greece.

The fund has an effective lending capacity of 440 billion euros, which depends on guarantees, mainly from the euro zone’s AAA countries, only four of which now remain: Germany, Luxembourg, Finland and the Netherlands.

In a statement, the EFSF said the downgrade would not affect its lending capacity, and emphasized that its short-term rating remained at S&P’s top level.

COPENHAGEN, Jan 12 (Reuters) – Denmark took over the presidency of the European Union on Thursday signalling it would work to heal divisions between Britain and other member states over the bloc’s debt crisis.

As one of 10 EU countries that do not use the euro, Denmark finds itself in the challenging position of trying to help manage Europe’s two-year-old debt crisis while not sitting at the euro zone’s top decision-making table.

One of Denmark’s first priorities will be ushering in a new “fiscal compact” that aims to impose stricter budget rules on euro zone member states and others that sign up to it.

At a summit on Dec. 9, 26 of the EU’s 27 members indicated their willingness to join the treaty, with only Britain saying no.

“The EU family is a family of 27 and no less,” Europe Minister Nicolai Wammen told reporters in Copenhagen at the start of the six-month presidency, which gives Denmark responsibility for planning the EU’s agenda.

“The way to accomplish that mission is to be an honest broker at the negotiating table, and also to conduct a competent, open and responsible presidency.”

Denmark would form a “bridge of stability”, Prime Minister Helle Thorning-Schmidt said at a separate press conference. Other officials said the phrase indicated the country would work with its close ally Britain to see if London can be brought back into the fold.

BRUSSELS (Reuters) – After two years of turmoil that has shattered confidence in the economics and politics of European monetary union, it would be rash in the extreme to suggest an end is in sight.

But through the pall of gloom that has hung over Brussels for months, vague whispers can now be heard in the corridors about a corner possibly being turned if several tricky elements come together in the months ahead.

At this point they are purely speculative musings, laden with multiple ifs. And it remains far easier to list all the potential pitfalls and obstacles that lie ahead than it does to identify the possible bright spots.

But the combination of the European Central Bank’s provision of three-year liquidity for banks averting a credit crunch, the fact yields on Italian and Spanish 10-year bonds have fallen, the first steps towards deeper euro zone fiscal integration and the pure fatigue in markets after such a long period of all-consuming crisis may point to some relief ahead.

Mark Mobius, the Franklin Templeton fund manager known as something of a contrarian, went as far this week as to put a date on an end to the mayhem. That was stepping out on a limb, but it suggests that those attempting to take the pulse of the crisis may be beginning to shift their prognosis.

“The European crisis isn’t as deep and terrible as people think,” Mobius, who oversees $50 billion in emerging market investments, told Brazil’s Valor Economico newspaper, saying he expected Europe’s crisis to be over by June 2012.

“Nations there are in a process of negotiations and that takes time,” he said.