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José Manuel Durão Barroso

President of the European Commission

Speech by President Barroso: "Unity in difference, strength in convergence"

Interparliamentary committee debate on the European Semester

Brussels, 27 February 2012

Mister Chairman,

Vice-President of the European Council,

Honourable Committee Chairs,

President of the European Council,

Dear Members,

It is a pleasure to be here to open this interparliamentary debate on the European Semester. I warmly welcome the European Parliament's initiative to organise this meeting and I am particularly happy to have the opportunity to exchange views also with representatives of the national parliaments, which, by putting in place reforms on the ground, have a really crucial role in the process.

This interparliamentary debate is an example of European democracy in action. In a globalised and connected world, I believe it is essential to strengthen European democracy by enhancing the relationship between the national democratic processes and the European democratic process. The European Semester is a way to anticipate and prevent dangerous economic imbalances before they spillover to other countries, and as such, is an integral and central plank of our comprehensive approach to resolving the crisis and working for sustainable growth.

This type of meeting is crucial in ensuring its democratic legitimacy.

I wish to focus briefly on three elements today. The first is the importance of the Semester in our response to the financial and economic crisis. The second is how the Semester can help to prevent future crises.

And finally I would like to mention some of the steps we can all take to maximise and improve the process – both in terms of its economic and democratic elements.

The first point: the European Semester's purpose is to strengthen coordination between Member States' budgetary and structural policies while they are still in preparation, in order to detect inconsistencies and emerging imbalances. President Van Rompuy explained this in a very clear way so I can go fast.

Just to highlight that the Commission kicked off the second of these Semesters in November last year with our Annual Growth Survey for this year 2012. We set out five priorities on boosting growth and competitiveness, in areas such as restoring bank lending, tackling unemployment and promoting competitiveness. These have been largely supported by finance and employment ministers in the Council.

On Thursday, the Heads of State and Government will meet here in Brussels with me and of course under the chairmanship of the President of the European Council to discuss these challenges and how to address them.

This will open the next phase of the European Semester, where Member States will present their national economic reform programmes.

Without going into all the subsequent phases of the Semester, the point I want to make is this – the Semester is a process of mutual support, of learning and of common and practical guidance and workable solutions to the problems we face today. Let me give you some examples of the type of solutions and support I mean. I mean for instance constant guidance throughout the process by the Commission and the Council because the problems are common and have of course consequences for the whole European Union.

I mean for instance bilateral meetings with each and every Member State followed by targeted and relevant recommendations. And I also mean Commission action teams being sent to the eight Member States with the worst problems of youth unemployment during February, to help identify how their unspent structural funds could be used to get young people into work. So it is not only about the classic macro-economic surveillance and enforcement, it can also be a real dialogue and interaction about economic policy and how we can get back to sustainable growth.

Moreover, by linking the Semester into the wider economic governance structure we now have in Europe, and into the Europe 2020 strategy for growth, the Semester plays a pivotal role in providing the stability we need to restore confidence. Of course there will be no growth without confidence. And there will be no resolution to this crisis without growth.

I want to underline this element of sustainable growth because one of the critical points, as political leaders I am sure all of you have identified, is the need to mitigate the social consequences of many of the painful reforms that are taking place in many of our Member States and also to have parts of the social acceptability, the political visibility of these very ambitious programmes. That is why I insist we have to be clear about the goal, the goal is growth. Fiscal consolidation is not an end in itself and it is important that the citizens of Europe are aware of the goals we are pursuing together with these reforms so that they understand what are the sacrifices for, and even more, that the sacrifices are distributed in a fair manner and not only having a burden always on the same, most vulnerable parts of our societies.

This brings me to my second point – how the European Semester can help prevent crises in the future.

If there is one conclusion that all policy-makers and citizens must be able to draw from this crisis, it is that our economies are now inextricably linked, both within the European Union and also globally. What happens in one country can have huge implications on all others. And indeed the world is looking what is really happening in the euro area and in the European Union. This shows the high level of interdependency we have now in the global economy.

In Europe we have built a solid Single Market and it is one of our greatest assets and areas of economic potential – without it, I am sure that the crisis in Europe would have been much worse. But today's open economic model, that has delivered so many benefits, also requires an increased level of responsibility. So it is vital that we improve our early-warning system, precisely to avoid the type of spillover effects we have experienced in Europe since 2008.

Let me be clear – national budgetary decisions are the responsibility of national parliaments and will remain so. This is of course clear in terms of democracy and in terms of separation of power. But the purpose of the Semester is to create a platform whereby potential weaknesses or threats can be detected early. Also to read: relevant and accurate information and I believe that when we have more information at the European level we are also giving a contribution to the decision making at the national level. As such, it is an important tool in preventing unintended imbalances and unwelcome side-effects.

I know that there will be concerns or sensitivities about opening national plans to European Union-level scrutiny, but let us not forget that every one of our budgetary and economic decisions is under the intense scrutiny of external partners and market actors, So let's show that we are in this together and going in the same direction.

Let's never again pay the price for ignoring just how closely our futures are interlinked. Let's use the European Semester as an important instrument in delivering on the potential of our internal market and restoring growth in Europe.

The third point: if the Semester is to successfully contribute to these goals, it must evolve and improve with each cycle. It is a process that cannot work if it is done in a top-down way and that can only work with the backing and commitment of all actors at all levels.

That is why we warmly welcome the views and experiences of all actors in the process.

I also welcome the reports presented in the last European Parliament plenary of February on the first European Semester, and am encouraged by the wide convergence of views between our Institutions.

The Commission recognises that there is room for improvement in all phases of the cycle. That is why, for instance, we brought forward the Annual Growth Survey to November last year, to allow for greater debate in the European Parliament and the national parliaments ahead of the Spring European Council.

However, there is also scope for improvement in putting in place structural measures on the ground that are essential to regain European competitiveness. While I fully recognise and applaud the huge efforts being made across the European Union and praise the bold reforms going on in several countries, I am also concerned at the slow progress in some areas. While significant headway has been made in terms of fiscal consolidation, growth-boosting reforms are still lagging behind. I mean this in areas such as tax reform, pension reform, labour market reform and opening up the services and retail sectors. Of course the picture is mixed across the Union, but these are the areas the Commission and Council will focus on in the Country-Specific Recommendations.

I know these reforms can be difficult and sensitive. But they are entirely necessary to restore growth and competitiveness. I look to you to maintain a high level of ambition, and to make the most of the guidance, support and partnership enshrined in the Semester as you do so. I also look to you to foster frank and honest debate in your countries and constituencies about the need for reform in Europe and about the consequences of a lack of competitiveness in a globalised and competitive world.

I believe it is critical on these efforts, namely about Europe 2020 Strategy, the ownership at the national level of these reforms not only by the national parliaments but also by social partners and the regions. More has to be done here because as was highlighted by the President of the European Council we have to avoid the idea that there is a complete disconnect. Sometimes, I have to tell you, I also feel that there is this disconnect about what we here, what the Heads of Government come say here in Brussels and afterwards what happens in our Member States.

Each of us has a role to play in fostering this debate and in explaining the many ways in which working together, breaking down barriers and using all the advantages of European integration can help us build job-friendly sustainable growth.

When I say growth I mean also investment. We are going to discuss this in the next European Council and I will come with an idea and with a proposal regarding project bonds. The concrete idea is to anticipate the proposals we have made for the next Multi-Annual Financial Framework. How can we leverage investment by using our structural funds, with the European Investment Bank, with the private sector so that we can have more investment in Europe for instance in infrastructure. There are a lot of inter connections form transport to energy, to digital in Europe. So when we speak about growth is not only about the reforms it should also be about the appropriate level of investment at the European level and also about the ways to mitigate the negative consequences form the social point of view of some of the measures that are taken.

Ladies and gentlemen,

I will finish with this observation. By bringing together so many crucial elements into one process, the European Semester encapsulates the tremendous potential that we have in the European Union. The key to unlocking this potential is taking advantage of all our opportunities and assets.

That is why I believe that this European Semester represents the essence of this winning combination: the combination of national level input and European Union level work, of ensuring stability in the short-term and stimulating sustainable growth for the medium- and long-term.

By bringing together all these elements, all this knowledge and all these tools into one process, we have a tremendous potential and real opportunities to make our recovery and our future growth stronger.

This is about mobilising all these tools, synchronising them and using them in the best way. It is also about strengthening the links between the national and European dimensions of budgetary and economic decision-making. It can represent a very important step forward in European cooperation. Now we all have a duty to be equally ambitious in strengthening its democratic legitimacy.

Today's meeting I think can be a very important step in this ambitious vision.

I wish you a constructive day and I look forward to hearing the outcomes and also to participate on our democratic debate.

Thank you for your attention.

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