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José Manuel Durão Barroso

President of the European Commission

Beyond the crisis: the view from the Commission

Joint Parliamentary Hearing

Brussels, 9 November 2010


Prime Minister,

Honourable Members,

First of all let me thank you for the invitation. I always value very much these occasions where I can address both the European Parliament and national parliaments. And this is not just a matter of courtesy, it is really a political message I want to convey to you, because the challenge today is one which requires the commitment of all of us. We are facing an extremely difficult challenge, we will not succeed if we do not act together – the European institutions and our Member States. We need to have a common vision of how to lead the European economy to growth and jobs for the future. And we need a common determination to engage Europeans to work together to this goal.

That is why the parliamentary dimension is so important. You have the democratic authority required to create the ownership needed, and you have the reach to spread this message throughout the Union.

You know that I have been consistent in my efforts to intensify political cooperation between the Commission and the European Parliament, and that I have always been in favour of broadening and deepening the political dialogue with national parliaments.

This is why it is important to intensify our contacts now in this specific situation, talk more often to each other, listen also to the others. This is why I think that we should now try to achieve a common approach how to face the crisis.

One message of the crisis is clear. Europeans are extremely concerned. They are worried above all about their jobs – possibility of keeping the job for those that have it, to gain a job for those who lost it or to have a job in the future for those who still study. They are also worried about their pensions, their education, their quality of life and their environment. And they look to the EU for answers. So we need to show that there are answers, and that if we get it right, Europe can face the future with confidence.

This crisis has highlighted our interdependence and tested our solidarity like never before. I believe that we have withstood the test. But our work is far from finished.

We are in a very important point in economic recovery. We all know that there are signs of improvement. The EU economy will grow more this year than previously foreseen. But recovery is not yet firmly established and the situation is very different among the member states, so there is no room for complacency. What we have to do is to drive all the forces for a solution.

Europe's economic policy has been transformed since the crisis. We are undertaking a fundamental and comprehensive reform of our financial system. We have taken huge strides in economic governance. And we are putting in place a new system to build lasting prosperity for tomorrow – the Europe 2020 strategy for smart, sustainable and inclusive growth.

Both the European Parliament and national parliaments have been deeply engaged in examining all the building blocks needed to reform our financial system. Key measures are already being put in place – on supervision, for example. Others are on the table, and a few still have to be put forward.

But by the end of next year, we will have seen a revolution in our financial sector, putting it on sound foundations for the future. An essential prerequisite for the future health of our economies, put in place with a speed which matches or exceeds any comparable global partner.

But one of the features of the crisis has been how tackling one set of problems is never enough. The public debt crisis of this year is a vivid example. It exposed the shortcomings in our economic governance, how the rules had failed to keep pace with our interdependence.

We could never build sound, long-term economies on shaky foundations. That is why new economic governance is so important. In May, we put in place a stabilisation mechanism that did the job – the immediate pressure was contained. In September, the Commission proposed new tools for reinforced economic surveillance and to detect early, and deal with, sources of imbalances. These proposals were very instrumental to build on a strong consensus that was reinforced by the work of the Task Force chaired by the President of the European Council Herman Van Rompuy.

Last month's European Council backed basically this approach and looked in particular at setting up a permanent crisis mechanism.

We need to be sure that this will be an effective tool, and the Commission is now looking in detail at all the key features of this mechanism.

The Member States also agreed to take this forward with a "surgical" Treaty change. We all know that opening up the Treaty is like opening up Pandora’s box. But this deserves your support, as it would add further legal certainty to the permanent mechanism and at least some Member States need it for legal reasons. The Treaty change is very explicitly designed to be limited in scope. It will not change basic EU competences, so the target of ratification by mid-2013, when the current temporary mechanism runs out, is I believe possible. It is possible of course if everybody wants to give his contribution to achieve it at the moment.

I think this is essential to secure the right foundations for the future. But these pillars of stability are not enough. We need much more than this to bring the growth and jobs we need. We need a wholly new approach to building for the future, to making the changes that are necessary.

This is what the new Europe 2020 strategy is about. We see the future of the European Unions as a smart, sustainable, and inclusive future. Our common task is to guide our economy towards new sources of growth. I say common task because change on this scale needs to be a common endeavour, and there is no link in the chain more important than parliaments. We need your support and your ownership to approve, topromote, explain and implement the reforms we need.

And this work has to start now. There is no time to lose. We need to frontload the most growth-enhancing structural reforms.

Europe 2020 offers a strong, co-ordinated, European framework of future-oriented measures. A framework that focuses on citizens; that makes the most of the Single Market; that finds new sources of growth, based on innovation, sustainability; that makes Europe more agile, more flexible and more resilient.

So-called flagship initiatives are currently bringing Europe 2020 to life.

The Digital Agenda, the first we have launched, accelerates the roll-out of high speed internet to match the faster connections of some of our competitors.

The Innovation Union flagship will deliver a real change on how and how much we innovate in Europe. From science and technology-driven innovation to boost the competitiveness of our industries, to new business models, to creative design and marketing.

Other initiatives cover jobs, industrial policy, tackling poverty and social exclusion, youth and resource efficiency – a package that illustrates the breadth of what we must achieve if we are to get truly on the right path ahead. And an approach which gives us a common compass to chart the way forward.

To achieve this, we need new tools. Building also on the experience – sometimes not satisfactory – of the past Lisbon Strategy. That is why the National Reform Programmes are so important.

If these Programmes shrivel into a bureaucratic exercise, they will be a waste of time and energy. But if they succeed in bringing together national economic policy with the assets of the European Union level, they can be the levers to galvanise a real step change in our prospects for growth.

That makes it essential that parliamentarians at all levels are in the forefront, working with national governments, making sure that the Programmes make sense from both a national and a European perspective. The more difficult the necessary reforms, the more critical it is to have a consensus at national level. Those Member States where national parliaments and governments are jointly involved in the drafting are doing exactly the right thing.

And when the Programmes are finished, this will not be the end of the story. Parliamentarians should use them to monitor progress towards the agreed targets, to see what is working well and what is working less well, to use them as a real tool for democratic involvement in the direction of the economy.

I know of course that some national parliaments have voiced concern about possible interference by the European Union in their budgetary prerogatives. This is of course not true, this will not happen and this was never our intention. I am glad that we were able to address these concerns.

The “European semester” is a critical tool to bring national and EU efforts together. It means sharing information – and we have more information we have more power, that we are in fact empowering all the players – it means sharing information about fiscal situations, macroeconomic trends and major policy plans, at the right time to make a difference. As such it reflects what the crisis has made so clear if it was still necessary though I believe it was no longer necessary but at least now there are no doubts –policy decisions in one Member State have a direct impact on the economies of others. So economic policy can no longer be seen just as a national issue. This is self-evident. To deny this is to deny reality. Interdependence is there, even globally. How can we sustain that there is global dependence and deny interdependence at the European level?

So it makes sense to put together the different instruments. We do need a consistent and comparable approach to make such a system work – with action in areas like minimum standards for domestic fiscal frameworks or budgetary planning. But these should not undermine national parliamentary prerogatives.

And as we develop economic governance, it goes without saying that this must go hand in hand with reinforcing democratic legitimacy, with a closer and more timely involvement of the European Parliament – the European is directly elected and the European Parliament has full legitimacy, it is not a second-class Parliament. The European Parliament is now much more reinforced after the Lisbon Treaty. I think this is also important because I am afraid to say that at national level, some national politicians have not yet understood what the reality of the European institutions is.

Honourable Members,

The subject of our debate today is very well chosen. At times, the crisis has required huge and concentrated effort. But we all know that our job is not to return to the economy as it was. The economy of before will not come back. It is to build the economy as it should be – an economy that is confident and competitive on the global stage; an economy embedded in our principles and our values at the European level. We want – and it is enshrined in the European Treaty – a social market economy, an economy which contributes to our responsibilities to the most vulnerable in society; an economy which is truly sustainable, fit for purpose in the resource-efficient, low-carbon economy of the future. This is the greatest challenge we have now. We want to remain competitive, we want to face the challenges and at the same time we do not want to give up on our values of social inclusion and of a respectful environment. And this requires a great effort from all of us at the national and at the European level. I am committed to working together with you to make this happen.

I thank you for your attention

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