European Commissioner for Economic and Monetary Affairs
Speaking points at the ECOFIN press Conference
Luxembourg, 19 October 2010
Let me start with a few remarks on international economic issues with the view of the forthcoming G-20 ministerial later this week in Korea.
The Great Recession we have experienced has largely been a crisis of the advanced economies. The emerging economies were able to overcome the crisis quite quickly and they have been growing strongly for some time already. In the US, the recovery appears to be running out of steam. In Europe, the economic recovery is in progress, and it has recently been confirmed. Rebalancing of growth is taking place thanks to the strengthened domestic demand. Unemployment has stabilised, and employment is recovering in most parts of the EU.
In the world economy, however, the pre-crisis imbalances are re-emerging, which threatens a sustainable recovery and job creation. In this context, it is essential that G-20 will be able to restore the sense of unity and, especially, pursue effective international policy coordination to rebalance global growth. All countries should do their part to rebalance global growth, the surplus countries by reinforcing domestic demand; and the deficit countries by focusing on export growth.
The EU works for a strong and stable international financial system in which exchange rates should reflect economic fundamentals. This is an essential element of the G-20 goal to rebalance global growth, for the sake of sustainable recovery and job creation.
We discussed fiscal policy. I recalled that, in the context of the agreed exit strategy, fiscal consolidation should start in 2011 in all EU member states. Thus, the preparations of 2011 budgets are decisive.
We assessed whether Lithuania and Romania made adequate progress towards meeting their Excessive Deficit Procedure (EDP) deadline and concluded positively. We also had a good discussion on the economic and fiscal situation in Hungary and Poland, which will be followed up in December, when the Commission will make a thorough assessment of the budgetary situation in all EU Member States in the context of the EDP.
Let me also stress that yesterday we made satisfactory progress in the context of the Task Force, and achieved convergence towards the Commission's initiatives to reinforce economic governance, notably on
focusing on prevention and pre-emptive action;
putting an emphasis on debt sustainability;
agreeing a method to address macro-economic imbalances; and
establishing an effective enforcement mechanism.
But let me point out that the legislative process only starts now. The next step will involve the European Parliament as the co-legislator. In the context of co-decision process, we should all strive to conclude the legislative work effectively and in time, so that the new system of economic governance could be in force by next summer (2011), when we have the major next round of assessments of effective action.
I see this as a matter of credibility for the EU in terms of reinforcing economic governance.