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José Manuel Durão Barroso

President of the European Commission

Statement of President Barroso following the European Council on economic governance

EP plenary debate on EuroCouncil on economic governance

Strasbourg, 24 November 2010


Honourable Members,

If a week is a long time in politics, a month can seem an eternity. A lot has happened since the last European Council, not least the recent events in Ireland.

The action intended is a further, crucial step to safeguard the financial stability of Ireland, the euro area, and the EU as a whole. The two instruments we set up in May are effective tools that can do the job they are designed to do. Ireland has very specific issues to address, and these instruments are able to respond to that.

This intervention should now allow the Irish economy to get back on the path to sustainable growth, drawing on its fundamental strengths.

Honourable Members,

The past few months have been a challenge. We have come a very long way. But the work is not yet complete.

Our economic governance is being transformed.

The Task Force chaired by President Van Rompuy has presented its results, which are very positive. Benefitting from significant inputs from the Commission, it has managed to achieve broad convergence on the Commission's legislative proposals, and also covered some other very important aspects of economic governance. Crucially, stricter fiscal rules and broader economic surveillance – both cornerstones of the Commission package - have been preserved.

I have stressed many times before the importance of having the new framework operational as soon as possible. So I was pleased that the European Council backed our idea for a "fast track" approach, and set itself the objective of agreement on the Commission's legislative proposals by summer 2011.

It is notable that the questions voiced last September about the Commission putting legislative proposals on the table have now turned into a desire to fast track those proposals.

Now the normal legislative procedure must run its course over the coming months. I count on the Community method to work as well as it has always done, and help us strengthen economic governance in Europe and the euro area.

It is my belief that we will end up with tough rules, based on adequate incentives for compliance, semi-automatic implementation and an effective framework to deal with broader macroeconomic imbalances.

We need reinforced and rigorous economic governance to achieve stable and sustainable growth, which is critical for the employment and welfare of our citizens.

Honourable Members,

A permanent crisis resolution mechanism for the euro area is an essential piece of this jigsaw. The temporary mechanism currently in force will expire in 2013, so it is vital that something credible, robust, lasting, and grounded in the essential technical realities is put in place by then.

That is why the Commission has already started its preparatory work on the general features of a future new mechanism for the euro area. This mechanism, which we are preparing in close consultation with the President of the European Council, should be seen in the context of the overall effort to reinforce economic governance in the EU and euro area.

So I would like to make clear that even if the mechanism is funded from national budgets, it will remain a "European" initiative, and will of course be able to draw on the expertise, independence and impartiality of the Commission to make it function.

The mechanism will have three main components: a macroeconomic adjustment programme, a financing arrangement, and private sector involvement. The latter can take many forms. But first and foremost I want to make clear that whatever is decided on private sector involvement, it will only apply after 2013.

The Heads of State and Government decided unanimously that treaty change is required to establish the mechanism.

When we concluded the Lisbon Treaty last year, nobody imagined someone would be proposing new changes so soon. We all know that this is never an easy process, and we all understand the risks.

That is one of the reasons why I explained - during the European Council and even before - that we should not accept a revision of the treaty that calls into question the voting rights of Member States. I'm happy that this argument was accepted, and that any revision will be a limited and surgical one.

It also makes sense for us to have as straightforward a process as possible. That is why I would caution against the temptation to start linking this to other, unconnected subjects.

Honourable Members,

All this action is not taking place in a vacuum. The European Council, the G20 Summit, the EU/US Summit in Lisbon last weekend: all are staging posts, part of our larger plan to restore Europe to stability and growth.

We will speak about the G20 Summit in the next debate in this House, so let me for now concentrate very briefly on the very important EU/US Summit in Lisbon. The atmosphere at the Summit was intimate, friendly, and focused.

Together with President Van Rompuy, we agreed with President Obama on the need for a transatlantic agenda for growth and jobs, including regulatory convergence and early consultation on issues like competitiveness and global reform.

We have tasked the Ministers and Commissioners with moving this concrete work forward, notably through the Transatlantic Economic Forum.

The global economy, the G20 and emerging economies were also very much on the agenda.

My point is this: the EU will only be able to achieve its objectives if we activate all policy areas; if we capitalise on the relationship we have with all our key partners; if we use the leverage available to us in an integrated way at all levels –national, European and global level.

One thing is clear: we will have more influence on the outside if we are capable of reaching agreement among ourselves, within the EU. In this respect, I am concerned that some of the more recent positioning has not contributed to the focus and coherence of our joint action.

I think the progress that we have achieved so far on economic governance is an indication that we can, with sufficient political will on all sides, make Europe a stronger force in the world for the benefit of our citizens. But for this let's be clear: we need political will, we need a sense of common purpose not only from the European institutions, but from all our Member states, and that is an appeal I want to make today – more coherence, more convergence, more common purpose.

Thank you.

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