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European Commissioner for Economic and Monetary Policy
A Strategy for Growth and Jobs until 2020
Figures and graphics available in PDF and WORD PROCESSED
European Parliament, ECON Committee meeting
Brussels, 16 March 2010
Honorable Members of the European and National Parliaments,
Ladies and Gentlemen,
Thank you for your invitation to participate on your discussion on this very important topic. I feel privileged to discuss the European economic situation in this distinguished forum of European politicians and decision makers. The presence of knowledge and expertise from both European and national parliaments creates a unique opportunity for a well informed debate on the challenges ahead of us.
The economic and financial crisis has demonstrated that a continuation of past decades' economic growth cannot be taken for granted. The same applies to the consolidation of public finances, which is a prerequisite for growth. In two years the crisis has wiped out over 20 years of consolidation of the public finances.
This is indeed not a time for business as usual. This is a time for step change in our policies to promote sustainable growth and job creation.
Therefore, the mobilisation of growth drivers is the underlying principle in Europe 2020. For Europe to create growth, wealth and jobs it needs to find effective ways to improve productivity.
In the Europe 2020 strategy we strive for sustainable economic growth and job creation. In addition to correcting the structural weaknesses in our markets and public sectors, we need to improve the productivity of our economies by investing in knowledge, innovation and education.
I'd like highlight two examples of what is being proposed.
In education for instance, one of the main objectives of Europe 2020 is to increase school attendance. The school system is under tremendous pressure. Education needs to prepare students to deal with more rapid change in the society and labour markets than ever before. Teachers should prepare students for jobs that have not yet been created, using technologies that have not yet been invented.
Investments in human capital will always bring back gains in terms of jobs and wealth creation. Education is a powerful force – economically, too.
Second, we need to be able to improve the productivity of European economies, especially in the new innovative sectors. Next generation digital services and energy technologies are examples of new market opportunities. The creation of a digital single market can bring concrete benefits for consumers with greater choice and for businesses by providing a larger market. The EU should pursue greater harmonisation across a number of areas having impact on online commerce and services.
In the Commission proposal for Europe 2020, we set a limited number of targets which have a clear impact on Europe's economic performance. The targets will be discussed and tailored to suit the particular situation of each member state. The targets are not an aim itself, but they will tell us a clear story on how we are doing in terms of growth and jobs.
What is important in mobilising growth drivers is that all such measures are implemented in line with the sustainability of the public finances.
In the course of the Europe 2020 preparations, I have underlined the need to build the strategy on two legs. This is needed for the strategy to be realistic and to have a real impact. Europe's economic success calls for both the consolidation of the public finances and the mobilisation of growth and job drivers. These two pillars form the basis of the Commission proposal.
Ladies and Gentlemen,
The latest developments in the European economy and in the euro area Member States have demonstrated the urgent need to strengthen the financial stability and economic policy coordination in the area.
Yesterday the Eurogroup and today the ECOFIN endorsed the Commission's assessment on the situation in Greece. Greece is now on track to meet the ambitious 4 percent deficit reduction target in 2010. Greece's ambitious programme to correct its fiscal imbalances is now on track. Correcting these imbalances and restoring competitiveness is essential to put Greece back on a sustainable path.
However, we are certainly not yet out of the woods.
In order to safeguard financial stability in the euro area as a whole, the Eurogroup yesterday reaffirmed the commitment by euro area Member states to take determined and coordinated action, if needed. We clarified technical modalities enabling a decision on coordinated action which could be activated swiftly in the case of need. The Commission is ready to do its part and to propose a European framework for coordinated and conditional assistance.
In addition to the immediate crisis management, we need to look at how similar situations can be avoided in the future. The Greek crisis and its aftermath have demonstrated the need for enhanced economic policy coordination in the euro area. This underlying need was already recognised and the legal basis provided in the Lisbon Treaty. We are preparing proposals for the implementation of the Article 136 of the Treaty. My intention is that the Commission could make a proposal for enhanced economic policy coordination before mid-April.
First and foremost we need it to prevent unsustainable public deficits. Therefore we need to be able to monitor better the mid-term budgetary policies of the euro area member states. We need to be able to issue broader and stricter recommendations for the member states to take corrective measures.
In addition, the current economic and financial crisis has proved that policy coordination cannot be limited to purely fiscal matters, central as they are. Other macroeconomic imbalances as well can have serious consequences for individual countries and the euro area as a whole.
In particular, weak competitiveness and the associated current account deficits compound the detrimental effects of fiscal deficits. Therefore, the most urgent task is to implement corrective measures in the deficit countries which have lost their competitiveness. Also large and persistent current account surpluses in some MS can have an effect on growth in the euro area as a whole. This is especially true when rapid fiscal consolidation is needed in other parts of the currency area.
Ladies and Gentlemen,
Let me conclude by underlining the importance of the European and national parliaments in the development and implementation of the EU's growth and jobs agenda. You have a key role to play in steering the economic policies able to reach the Europe 2020 objectives and create jobs and wealth in Europe.
Parliaments have an important role in the implementation in your capacity as legislators. Many of the future policy proposals underlying Europe 2020 will depend on your participation and contribution. The fact that we must pursue our growth policies simultaneously with fiscal consolidation, underlines the need for serious prioritisation. This requires genuine political choices, which can only happen democratically with the full engagement and support of the parliaments and citizens.
I trust we and Europe can count on your support and active participation in making Europe 2020 a success story for our citizens. Thank you.