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José Manuel Dur ã o Barroso
President of the European Commission
Statement of President Barroso at the European Financial Services Roundtable dinner
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European Financial Services Roundtable
Brussels, 4 February 2010
Ladies and gentlemen,
Mr. Pébereau (EFR chair, host),
Thank you for inviting me this evening. The European Union stands at a key moment. We have a new Treaty and next week, I hope, a new Commission with a strong endorsement from the European Parliament.
But this fresh start comes at a time of real challenges. This evening I would like to share with you my thoughts on the transformational agenda I believe Europe needs to meet these challenges.
The economic situation remains very fragile. It seems that the global recovery will be slow. Business and industry are seeing tough times. And most importantly, we are facing the very real prospect of high unemployment.
The crisis has shown the European Union and indeed the whole world just how inter-dependent we all are.
That interdependence can be an asset. Here in Europe our single market, the euro, and the structural reforms we have made together over the past decade have all prepared us to weather the economic storm.
But equally the crisis has brought to the fore real risks of negative spill-overs and contagion, risks we had all rather under-estimated in the past.
And we have seen that unilateral responses and initiatives by Member States simply do not work any more. The last year has reminded us of the need to work together towards our goals.
But above all the crisis has shown just how important it is to continue to accelerate the modernisation of our economies – and the shift towards a more prosperous, more responsible and stronger future.
Today we have a unique opportunity to transform our future. We in Europe are well placed to do so. We know where we want to go. And we have a clear roadmap for getting there.
One of the first acts of the new Commission will be to propose a successor to the Lisbon Strategy for Growth and Jobs – Europe 2020. It will be both a structural reform strategy and an exit and recovery strategy. The emphasis will be on co-ordination. The times we are in require more, not less economic coordination.
Put simply, the aim of the Strategy is to make Europe a more competitive, innovative and attractive place – a smartly regulated environment in which people want to do business and invest. A Europe that also keeps its commitments to an inclusive and a sustainable economy.
We need to make sure that conditions are right for the uptake of new products and services. One of the next big steps is to make a reality of the single market in services, particularly in the more tradable sectors, such as professional services. And, given our changing demographics, we also need to think about giving a boost to the health and social services of the future.
I want the Commission to give a new boost to the single market, bringing it in line with the demands of tomorrow's economy. We need to gear it up to deliver on new sources of growth, and do more to make sure its benefits are real for businesses and citizens alike. I have asked Mario Monti to make a personal contribution to this work and look forward to his report in April.
We will take a fresh look at intellectual property. And I don't just mean the patent – important though that is. There are other issues that which need to be tackled as well. And to foster the growth of knowledge-based firms, we will remove the barriers to the cross-border provision of venture capital.
In that context I would recall that a core element of our proposal for an Alternative Investment Fund Managers Directive is a European passport for private equity fund providers.
Another way of encouraging innovative start-ups is by tapping the full potential of the digital economy. We will unleash the competitive forces behind high speed fibre and wireless networks that are essential for the transition to a Digital Europe. And we will set out an ambitious Digital Agenda which takes concrete steps towards the completion of an Online Single Market.
And because an innovative economy implies more frequent job changes for most people, our emphasis on flexicurity and lifelong learning will continue. We have recently launched a major exercise aimed at forecasting future skills needs. This will allow us to better target the training that we offer people. We must also develop an intelligent common approach to economic migration.
Meanwhile, our commitment to our energy and climate change targets remains as strong as ever. There will be a major push on energy efficiency in the next five years. A clear focus on developing the 'European supergrid'. In transport too, we will set ourselves ambitious targets.
The point is this. The Copenhagen Accord might not be all that we hoped for. But it is a significant step on the road to a low carbon future. In the end, we will get there. And in the meantime, we need to keep on track so Europe can enjoy a 'first mover' advantage in green markets which will become massive by the middle of the decade.
Ladies and gentlemen,
Responsible and intelligently regulated financial markets are central to the new strategy. Our approach to reform has been measured and considered. We have balanced the need to act quickly with creating the space to weigh up the options. We have remained objective in the overall European interest.
We have been in the lead in driving forward the necessary changes to repair financial markets. And we have been steady and predictable in the way we have implemented this agenda.
I set out our reform programme last March, building on the work I commissioned from the High Level Group under Jacques De Larosière. Our ideas shaped the direction of the G20 work. In particular we set the global standard for the ambitious reform needed in supervisory structures. And now we are getting on with delivery in line with our shared international commitments.
Take the example of remuneration. The Commission's recommendation of April last year was in many ways ahead of the tide. The subsequent G20 conclusions on the issue were very clear. Most Member States have already taken measures in this area. We will report on the progress made later this spring. And we will continue our legislative work to ensure that responsible remuneration policies become the norm across all financial sectors.
We have already revised Capital Requirements Directive to strengthen the rules on remuneration in the banking sector. Our purpose is not punitive. But there is no question of returning to perverse incentive systems which can only lead to short-termism and excessive risk-taking.
The debate on further strengthening capital requirements – CRD IV – is at a relatively early stage. 2010 will be the year of impact assessment and calibration. There will be an assessment of cumulative impacts both at global as well as at EU level. We will need to get the calibration on issues like leverage ratio right, and ensu re international comparability.
The ideas recently floated on structural reform in the banking sector merit discussion. We are ready to have that debate within the EU and with our international partners. Let's see the detail and then take a measured view. But this should not stop us delivering on the ongoing repair programme which all European Member States agree is urgently needed.
However we may go about it, the fundamental goals of financial market reform should be the same worldwide. We are all focused on restoring a reliable and sustainable banking sector which is able to provide a steady supply of affordable credit to the real economy.
Bank lending has weakened significantly since the beginning of the crisis. And while this is perhaps explained by the low levels of demand for credit at the moment, it would be very worrying if the negative trend continued once the recovery takes hold.
My final point – the 'take home message' if you like – is that banks play a valuable – indeed an indispensable role – in the economy. We want a thriving banking industry here in Europe. But we need you to play your role responsibly.
The Europe 2020 transformational agenda cannot succeed without banks that are prepared to lend to the forward looking businesses that will drive change.
The insurance and pensions industry is just as central. We may have had a crisis, but that does not mean that the demographic time-bomb has gone away. It will put public finances under increasing strain. So, people will have to make some provision for their own retirement. The financial services industry makes this possible. And our reforms must be tailored intelligently to ensure that you can continue to do so in the future.
Ladies and gentlemen,
Thank you again for inviting me this evening.