Editor's Comment: European Commission's stimulus incompetence

Without a shred of irony, the European Commission proudly announced on 21 October that it had approved the first wave of stimulus spending on Trans-European Transport Networks (TEN-T) that formed part of its response to the economic crisis. Just to be clear, that's 21 October 2009 - 13 months after the collapse of Lehman Bros., and 11 months after the plan itself was announced.

Speedy action has never been a feature of the lumbering bureaucratic Brussels dinosaur, but this is really too much. To be so slow in allocating stimulus spending that it doesn't happen until after the most of the region is out of recession is breathtakingly inept. If it was me, I wouldn't have had the cheek to send out the press release.

But far from acknowledging its sloth, the transport commissioner was quoted as saying, "Unlocking this funding shows the Commission is serious about tackling the economic crisis." It beggars belief.

And it gets worse. This is just the approval of funds. When work will get underway is anyone's guess. After all, we are now heading into the Northern Hemisphere winter - not the best time of year to get construction projects moving.

Then that brings me onto the amount the Commission is spending. This is the first part of a € 500 million (US$ 745 million) package. The headline on the press release says € 500 million, but you have to break out a calculator and go to the last page where the 18 projects are listed to work out that the total allocation is just € 260 million (US$ 387 million). The Commission assures us that the remaining € 240 million (US$ 358 million) will be allocated before the end of the year.

That sounds like a lot of money - I would certainly like to have it in my bank account - but in terms of European construction output it is absolute peanuts. Even in its depressed state this year, construction output in the 27 EU member states will be in excess of € 1.3 trillion (US$ 1.9 trillion). In other words, October's allocation adds about +0.02% to European construction output. It's less than pathetic.

How the European construction fraternity must look in envy at China where the Government had announced and started to implement a US$ 585 billion construction-focussed stimulus plan before 2008 had even come to an end. Even in the US, where there has been justified criticism of the time it has taken for money from the Obama administration's Recovery Act to hit the ground, at least work is underway.

I should stay at this point that there is more to Europe's stimulus plans than the EU package alone. Many individual countries have their own national plans, the most extensive of which is Germany's, which allocates € 18 billion (US$ 27 billion) to construction.

Still, this doesn't change the fact that the Commission is doing too little, too late. European policy makers are prone to fretting about the competitive threat China and other emerging nations pose in today's global world. They are right to worry if this is how they run they run things.