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José Manuel Durão Barroso

President of the European Commission

Statement of President Barroso on the Annual Growth Survey

Joint press conference with Commissioners Olli Rehn and László Andor

Brussels, 12 January 2011

Good afternoon Ladies and Gentlemen,

Today we are setting out to break new ground and to decisively improve the way in which we manage and coordinate our interdependent economies in the European Union.

I sincerely believe that today by adopting this Annual Growth Survey 2011, we are in fact initiating what can be a new phase in European integration.

The European semester that begins today is at the heart of the reformed economic strategy. This is the first time we are going to put in place these instruments of joint governance at European level. It is not just a timetable - it will help to change the way governments shape their economic policies. We are effectively introducing a genuine EU dimension into national budgetary and economic policymaking for the first time. Of course, Member States will be taking the final decisions. But from now on, each Member State will bring ex-ante the EU dimension into the shaping of its national policy and decision making. This is the EU model. This is our economic governance in action. This will be further strengthened when we have the six legislative proposals on economic governance that were approved and now we need a formal adoption before the summer. And it is also a break from the past in that we will now be steering the policies upfront rather than judging and correcting them afterwards.

This Annual Growth Survey launches the European Semester, which shines a light on what every government in Europe is doing. And on where every government should be heading, keeping its eye squarely on the goals of our Europe 2020 strategy.

The Commission sees three main priorities and proposes 10 actions, to be agreed by the European Council. The three priorities are: 1) macro-economic stability, namely fiscal consolidation; 2) structural reform, namely in the labour markets; 3) growth-enhancing measures, from the Single Market to trade and common energy policy.

The first priority is enhancing macro-economic stability. Commissioner Olli Rehn will develop this. This means above all fiscal consolidation – not for its own sake but as a means of securing our future growth, jobs and prosperity. We need a plan to balance the books. Many Member States also need to tackle large and persistent macroeconomic imbalances. At the same time, bank restructuring must be speeded up to bring stability to the financial sector. Only then will we create the conditions for confidence.

Second, we need to push forward with structural reforms. If we don't want to have jobless recovery, Member States need to focus this year on labour market reforms so we can remove obstacles to higher employment. Commissioner Andor will develop these points. We need to help people get back to work or find new jobs by making work more attractive, urgently reforming pension systems and making sure that unemployment benefits provide an incentive to work.

This does not mean reducing our level of social protection – but it does mean modernising our labour markets to keep more people in work and to bring in those who are currently outside the labour market, namely young people. We can adapt while keeping our social market economy. In fact we need to adapt if we want to keep our social market economy. That means being more flexible with contracts and benefits while building new and dynamic ways of providing protection. We will continue to protect the vulnerable in our societies and at the same time work harder to make sure we have less vulnerable people.

Third priority, we need to speed-up investment in future growth through new sources of growth. Tough fiscal action and a plan for growth are not alternative strategies. They are different parts of a comprehensive strategy.

That means supporting business and investing in the growth industries of the future like green energy, innovative start-ups and advanced manufacturing. It means tapping into the potential of our Single Market. It means increased investment in major infrastructure projects through EU project bonds for instance.

The Annual Growth Survey puts all the elements together in one process. The 10 actions set out what the Commission believes is needed – based on serious analysis which underpins our proposals. Together with the chapeau Communication on this Annual Growth Survey we have presented a Progress Report on Europe 2020; a Macro-economic Report and the Joint Employment Report.

On this basis, I want Heads of State and Government to discuss and commit to these actions. Member States need to make clear national commitments in their medium term budgetary strategies and in their national reform programmes. The Commission will then propose country specific recommendations for each Member State which they should take into account when preparing their budgets for 2012.

As regards the issue of financial stability, namely the EFSF, the Commission states clearly in this document that we consider that its effective financing capacity must be reinforced and the scope of its activities widened. It is perfectly possible to take these decisions no later than at the next European Council in February.

In 2011, we need to get our act together. We need to break the vicious circle of unsustainable debt, disruption in the financial markets and low economic growth in some Member States. We face a simple choice: a decade of debt or a generation of growth. All the tools should be used to do the job.

What we have agreed today is a resolute prioritisation of growth. This is part of the comprehensive response. The difference here is that we are boiling that all down into what should be the essential focus for Member States in 2011. In fact markets are demanding precisely that: a stronger governance and increased economic coordination in the euro area and the EU.

We know the challenges ahead and we are doing what it takes to address them. I am confident we will be successful. Thank you for your attention.

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