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José Manuel Durão Barroso

President of the European Commission

A Stark Choice: Europe 2020 and a Holistic Approach to Growth

Figures and graphics available in PDF and WORD PROCESSED

European Parliament

Brussels, 5 May 2010

Honourable Members,

Europe has been presented with a stark choice.

We could take a beggar-thy-neighbour approach to the economic and financial crisis, a 'sauve qui peut' attitude that would risk everything we have achieved over the last 60 years.

Or we could increase European cooperation in an effective way, using all the tools at our disposal.

Events over the last few months, namely continuing market volatility, the need for further financial market reforms, the need for a determined consolidation of public finances - have only increased the clarity of this choice. We need to stress the importance of the European dimension more than ever. And we have an opportunity to do that precisely around the objectives of Europe 2020. I have been invited to talk to you now about Europe 2020. But looking at this package of measures for smart, sustainable, inclusive growth in isolation does not really make sense.

Because one of the key conclusions I draw from the crisis is that we are now living, is that we have to work together, at all levels and in all areas, to fill the gaps in the framework for regulation and supervision of the financial markets, to restore macroeconomic stability and sound public finances, to launch the structural reforms that can steer Europe to a path of sustainable growth and jobs.

All these three volets matter equally – we need to get it right in all three if we are to meet our objectives.

So all this demands a holistic approach. Financial markets reforms. Reinforced economic governance. Europe 2020. A sustainable, inclusive, smart growth. Leading global reforms through the G20, because many of these matters have external dimension. So we have to use all the levers at our disposal in an intelligent way, recognising that each one has an impact on all the others. Let me touch briefly on all of them. I will not come back to the financial issues I just mentioned in the previous statement. But let me mention the G20 to start with.

The G20 has been instrumental in addressing the financial and economic crisis and improving governance on a more global level.

The EU can take a large share of the credit for giving the impetus to the G20 and feeding it with ideas. The Commission has made a particular contribution to this, ensuring that the interests of all 27 Member States are properly reflected in our work.

We will work hard to ensure the EU maintains this leadership at the Toronto Summit in June and the Seoul Summit in November.

A key objective will be to get a clear message from the G20 on an exit strategy to support recovery – one where all major economies play their part. We have to address globally some of the imbalances that were indeed at the origin of this crisis. We should also ensure that the burden of rebalancing global growth is shared by all G20 members. Raising awareness of our strategy for Europe 2020 and enhanced economic coordination in the EU in general, and the euro area in particular, will be important in this context. It is important that Europe present a coordinated approach to the G20.

Another objective will be driving on with financial market reform. We need to keep up pressure on our international partners to deliver the timely and consistent implementation of the existing commitments with a level-playing field.

Over and above this, I believe the time is right for the G20 to send a strong signal on how the financial sector can contribute to the financing of bank repair.

We should strive for a coordinated and strong approach. A global agreement on bank stability levies linked to concrete resolution measures would send a strong signal. As the IMF recently suggested, this could be complemented by a tax on financial activities or profits. It's going to be extremely difficult debate, I have to tell you. From the preparatory work that is now done with our partners in the G20, there are many that oppose this idea. Nevertheless, I think we should pursue it.

EU message will certainly be strongest if we speak in one voice and if we can say that the EU has already done its homework.

That is why, before Toronto, we should aim to have agreement on the key financial services regulation files I mentioned earlier this afternoon. That will require flexibility and creative pragmatism from both this House and from the Council.

And this brings me to the core of Europe 2020 – now placed in its proper context as part of this holistic approach I talked about at the beginning.

As you know, the main elements of the Europe 2020 strategy were adopted by Heads of State and Government in March. We have had several occasions to debate them in this house. Even before we have made the proposal of the Commission we have consulted you. We now have to flesh the strategy out in detail; the urgent need for action is clear to all more than ever. I think, and that was what I lighted in some of the statements made in the previous debate, one of conclusion of this financial crisis and problems of the Euro Area is the need to go ahead with structural reform in a coordinated determined manner.

Better coordination of our economic policies is the centrepiece of Europe 2020. Even before this Greek crisis we have been suggesting, we have been proposing more coordination of economic policies. This is clearly necessary in order to avoid future crises. It is essential if we want to exit the crisis successfully, restore growth, translate that growth into more and better jobs, and ultimately ensure a sustainable and inclusive future for Europe.

The five targets proposed by the Commission are now largely consensual: numerical rates have already been fixed concerning targets on employment, R&D and the fight against climate change.

The numerical target for the education objective - reducing school drop-out rates and increasing the share of the population with a tertiary or equivalent education - will be agreed by the European Council in June 2010, taking into account the proposal of the Commission.

I am also strongly committed to getting a numerical target on the fight against poverty and social exclusion. We simply cannot accept the continuing scandal of 80 million people at risk of poverty in the EU. Work is continuing in the Council on this issue, and I will do all I can to convince the Member States of the importance of this target – knowing that this House shares our determination.

Europe 2020 must be a balanced programme. Of course you cannot have social equity without a competitive market. But nor are we willing to accept a Europe of economic efficiency without fairness.

The national targets will enable a better and more efficient monitoring of the progress of the Member States, to ensure that we achieve the objectives set at the EU level.

Member States are in the process of setting these national targets, in cooperation with the Commission. The targets, I hope, will be agreed at the June European Council, so that implementation can start immediately after.

The Commission issued a proposal on the integrated guidelines last week. They reflect the priorities of the Europe 2020 strategy. The number of guidelines is more limited than last time – now we have 10 as opposed to 24 - which will encourage ownership, readability of the instrument by all the different actors. I think this is a progress.

The June European Council should give political endorsement to the principles behind these Integrated Guidelines. But of course they will only be adopted after we have discussed them with you, European Parliament, which I hope can be as soon as possible.

Ladies and gentlemen,

I want to be clear: the Europe 2020 strategy is not just an inspirational list of objectives, it's not just a vision – it is a reform programme. Action will be taken at the European level. But equally important is the fact that reforms will have to be made in each of our 27 Member States, in full respect of the principle of subsidiarity. We will make it clear what has to be done at European level and what has to be done at national level.

And implementation will be key. As was said by distinguished representative of the Council, Mr López Garrido, there is now a much stronger awareness at Member States level of the need for reinforcing the European governance. I hope that Member States have learned with some of the shortcomings of the Lisbon Strategy. In fact, many of the objectives, if not all of the objectives, were good, in the right direction, but there was not, let's be frank, enough sense of ownership and not enough muscle in the implementation of the programmes.

That is why we need to close this delivery gap that prevailed under the Lisbon Strategy.

And for that you have a crucial role to play in ensuring the successful implementation of the Europe 2020 strategy.

The European Parliament, apart from your role as a co-legislator, you can also very effectively mobilise citizens and also, why not, the national Parliaments. I think it is critically important, the kind of relation, if I may say this to you, that the European Parliament establishes with national Parliaments. So that we are sure that these reforms are seen not only as the reforms "they", some "they", are making in Brussels, or sometimes in Strasbourg, but that "we" make at all levels in the European societies.

The sense of urgency – the need for reforms – must be shared by all key socio-economic and political players at all levels of the government, but also namely by the social partners. I believe it is very important; I welcome all the announcements made by Prime Minister Zapatero, regarding the need to involve these social partners.

And then we must ensure stronger, joined-up governance by tying all our coordination instruments together. Europe 2020 and Stability and Growth Pact reporting and evaluation carried out simultaneously to bring the means and aims together; input from the European Systemic Risk Board to ensure overall financial stability; structural reforms, measures to increase competitiveness, macroeconomic developments – all coming together to get us out of the crisis and firmly on the road to smart, sustainable and inclusive growth. If we want to be serious about economic governance, that's the only way to do it. We can now speak of serious economic governance at European level and separate the macroeconomics from the microeconomics, separate the internal from external.

So we need the Member States ad the European institutions to look at these matters in holistic approach and put all those instruments together. That is the only way to instil some confidence as well in our strategy.

I spoke of a stark choice at the beginning of my statement, and the Commission knows which path it wants to take.

I am confident this House shares that choice, a choice of determination, choice for Europe, and I count on your input as we continue our work.

Thank you for your attention.

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