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José Manuel Durão Barroso
President of the European Commission
"European Leadership – maximising our strengths for a new world order"
European Business Summit
Brussels, 18 May 2011
Mr Secretary General, my dear Philippe,
I am particularly happy to join you once again for the annual European Business Summit, and all the more given its emphasis on Europe's place in the global economy.
The theme of this year's conference: "Europe in the world: leading or lagging?" poses a rather provocative question on Europe's place in the global economy.
So let me start by putting things into perspective.
Yes, new global realities exist and competition is intense, but this is a logical consequence of globalisation. And I believe the right attitude towards globalisation is one of embracing it, seeing it as a real opportunity for business in Europe as well. And that is why I do not share the pessimism of some commentators.
For instance, what we call "emerging economies" are - at least in some cases - if you think historically, in fact, "re-emerged economies", economies that are now re-gaining the position that is natural for them to have, in the global economy because of their dimension. And in fact they are still lagging behind in their potential. So what we may expect, and what we may wish, is that they realise their potential, because that can be also positive for the global economy. It is perfectly legitimate for all countries to do their utmost to promote and exploit their strengths. And of course we expect them to do that in a responsible way.
But the European Union - and now I am going to be a bit provocative as well - is also a very strong emerging power. When we speak about Europe, and when we speak about the decline of Europe, some of us are referring to the decline of past colonial empires.
Europe can not pretend to run the world forever, but the reality is that today the European Union, with 27 Member States, and what it represents collectively, is much stronger than what it represented ten or twenty years ago.
-The European Union is the biggest single market in world, with 500 million consumers and 22 million enterprises. It is the world's biggest trading partner. It has a unique and enviable political, economic and social model, based on an open economy and on societies with the rule of law.
And that is why I would like to answer your question, the theme of this conference, with three main messages:
While some will look upon Europe's present challenges as evidence of our continent's decline, let us not forget that the financial and economic crisis is not restricted to Europe or to the euro area. It started outside of Europe and to some extent, it became a global problem - namely the problem of debt. The problem of debt is not just a problem for Europe. It is true that we are facing an unprecedented challenge in the European Union because - for the first time - we are facing the issue of sovereign debt inside an economic and monetary union. This is unprecedented, uncharted territory, and so requires some intellectual humility. And to understand the dimension of the challenge, we have to adapt progressively to matters that we have not known before. But basically I believe that there was a strong political determination in Europe to react to these new challenges that - I repeat - we had not known before.
The EU and Member States have shown their determination in overcoming the difficulties together, by addressing weaknesses in our banking, regulatory and public finance systems, .And at the same time they have embraced a new model of economic governance that strengthens the euro and gives stability to the euro area and to Europe as a whole. The European Council next month is expected to confirm a number of key decisions in this field.
A new economic governance, coupled with structural reforms and more intensive policy coordination, will stabilise the foundations of Europe's economy and internal cohesion. And as Philippe de Buck mentioned in the very interesting tables he presented, one of the problems we have is this divergence between the Member States. That is why I believe that now we have to address this in a real resolute manner. Now we have what we call the European Semester. The European Commission will come at beginning of next month with country specific recommendations, with a new system of governance that will hopefully be adopted by the Member States. In a collective, giant exercise, we hope to give precise recommendations of a binding nature to each country of the European Union, precisely recognising the differences between them. This is completely new. When you look at debt at the European level, it compares favourably to the situation in the other parts of the world. The problem is precisely the problem Philippe de Buck described in his presentation - when we see different levels of competitiveness, these create some levels of macro economic imbalances. I believe it is possible to overcome those difficulties. I do not see now in today's Europe one government that is not committed to structural reform. There are, it is true, different rhythms, different paces, but generally speaking all leaders in Europe are learning the lessons of the crisis and understanding that they need to adapt to a much more competitive environment
Moving on to the business environment,
The Commission's goal is for Europe to be a leader among global giants. For it to be a top region to invest in and also to learn from, due to its favourable conditions for companies, its stable currency, its mobile workforce, its smart and sustainable growth.
And our Europe 2020 strategy aims to make that vision a reality. Europe 2020 is a long-term growth roadmap, with concrete steps and targets towards a smart, sustainable and inclusive economy.
The task is not simple. But we can only achieve this goal if business and regulators all pull in the same direction.
I am greatly encouraged by the survey of over 400 CEOs presented to you today, which shows that businesses and the Commission not only share the same goals, but also the same confidence in Europe's future prospects. What is impressive is that it shows that European CEOs have great confidence in the European Union. European businesses in fact have more confidence in the future of Europe as a place to invest than in other parts of the world, including the emerging economies. So those who are in the 'real economy' bring us a confidence that is different from some more 'academic' analysts. The confidence is also reflected in the Commission's spring economic forecasts, released last week, which show upbeat business sentiment, and consolidated growth.
However, the CEO survey also makes it clear that companies want the Commission to improve the conditions for a more business-friendly environment. Make no mistake, ladies and gentlemen, boosting growth by facilitating business development is not just a priority for the Commission, it is one of our prime concerns.
To take a few of our key initiatives - deepening the Single Market, simplifying patent protection (I hope now after 30 years of discussion we are going to have a community patent !) and simplifying public procurement rules, enhancing access to venture capital, boosting standardisation and fully implementing the Small Business Act - all these will contribute to removing crucial obstacles for both large and small businesses.
In addition, innovation and entrepreneurship will be crucial in strengthening Europe's competitiveness, as well as tackling societal challenges such as healthy ageing. That is why we are prioritising our European Innovation Partnerships – to bring together all relevant stakeholders and bridge the gaps that hamper innovative ideas getting to market. Just this month, for instance, we launched a 600 million euro public-private partnership across 23 Member States to build Europe's internet of the future.
The Commission will do everything in its power to help create the conditions that will nurture growth and prosperity and make Europe a still more attractive place to invest.
But it is only businesses that can create growth and jobs. We count on your investment decisions to generate lasting employment opportunities, and we expect you to help foster a sense of entrepreneurship and innovation among our young people. I think this is a matter where we can and should improve – entrepreneurship: the ability to translate ideas into action. This is something where we need to make some progress in terms of societal acceptance of the value of entrepreneurship.
The global balance of economic power is not a fixed target. It is constantly shifting, and at an ever-more rapid pace. Europe must embrace this change, harness opportunities and make the most of our unique strengths in this flexible environment to help create a new, sustainable, responsible world order.
We are not the only ones trying to find solutions to issues ranging from government deficits to energy security and climate change, and we have a strong legacy in defining solutions to many of them. And we are used to working cooperatively and to find solutions, so in that matter we have some know-how that we can share with our partners. As we continue to do so, global interdependence must be the underlying reality of our times.
Emerging markets now account for over half of global GDP in terms of purchasing power. This represents massive opportunities for European companies, with their expertise in providing the services that every citizen is expected to require – from healthcare to financial services.
At the same time, a strong and stable economy at home will enhance Europe's attractiveness as a wise choice for foreign investors looking for long-term investment climate.
To maximise the competitiveness of EU businesses, an ambitious and balanced trade agenda is a top priority for the Commission.
That is why we are actively pursuing closer bilateral cooperation, based on open dialogue and common ambitions, with a number of key economic powers. Initiatives such as the Transatlantic Economic Council with the US, play a key role in this respect. The same applies to the so-called Strategic Partnerships with the emerging economies, including for instance the High Level Economic Dialogue with China.
At the same time, the high degree of interdependence between major economies, which the crisis made even more apparent, further intensifies the need for steady, multilateral global governance. In this context, the Commission continues to place high importance in the G8 and G20, and I personally strongly pushed for the creation of the G20 in the aftermath of the crisis in 2008.
Strengthening the multilateral trading system is also key and the European Union is very much committed to trying to unlock the global trade negotiations. Next week I will be in Deauville, at the G8, and this is precisely one of the issues we need to consult with our partners both at the G8, but also at the G20, to see if they really want to unlock these difficult negotiations. Because I believe that only in multilateral contacts we can have sufficient critical mass to effectively tackle economic challenges that affect us all.
Allow me to conclude by emphasising that the effects and consequences of the crisis, coupled with emerging global trends, will put Europe in a different context for a long time to come. But I believe that there are many great opportunities for European businesses, for European intelligence, European initiatives.
These trends do not have to spell disaster, whatever the doomsayers might like us to think! But rather they must point to opportunities for reinvention and reinvigoration and I am fully confident that together, with new systems of governance in the European Union, addressing some of the problems that we have identified here today, we will be able to overcome this crisis and make Europe a better place for our future generations.
I thank you for your attention.