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José Manuel Durão Barroso

President of the European Commission

Statement by President Barroso at the European Parliament Plenary Debate: "Economic Crisis in the Euro Zone"

European Parliament

Strasbourg, 18 April 2012

Mr President,

Honourable members,

During our previous debates we have agreed that the financial and economic crisis can only be overcome if we combine financial stability and fiscal consolidation with measures that generate growth and jobs. The economic situation in Europe does not allow for any complacency. We must continue to take the necessary steps not just to ensure stability, but to build sustainable growth and job creation.

I am therefore grateful for the opportunity to formally present to you today, immediately after the adoption by the Commission, two concrete initiatives which address issues we have discussed at length and where we are in agreement that significant measures need to be taken.

First, as part of the effort to tackle the single biggest social challenge which we face, the Commission has today adopted an employment package. I have previously reported to this House on some of the targeted measures we are taking, such as support for small and medium sized enterprises, the youth employment initiative, and the Commission action teams which are working with the Member States facing the more acute situation in terms of youth unemployment. The Communication adopted today by the Commission takes an even broader, structural perspective.

To create jobs across Europe and to meet the Europe 2020 employment target requires the concerted efforts of all actors. The Communication, therefore, puts forward a range of actions at all levels. They include proposals to maximise the job creating effects of EU budget instruments; policy guidance on supporting job creation, especially in areas with great potential such as the green economy, health care and the ICT sector; and they suggest a number of labour market reforms. At the heart of the Communication is also a desire to lift obstacles towards a genuine internal European labour market. Creating such a market will require action from national governments but also, and I am very much insisting on this, the full involvement of the social partners on the European level and on the national level.

While the Communication can take us a long way towards reinforcing the conditions for job creation, implementation on the ground is very much in the hands of the Member States. I would urge the Member States to move forward quickly to take the necessary steps at national level to help foster such conditions.

The second Communication we have adopted just now is about "Growth for Greece". Again, we are all in agreement on the necessity both to ensure that Greece delivers on its commitments and to support Greece and its people. The great efforts made by the Greek authorities and by Greek people over the last months in undertaking the measures necessary to secure the second programme opened the way for this Communication. The set of priority actions it proposes range from promoting youth employment to tax reform, and investing in education to smarter regulation. These actions, if properly implemented, should quickly unblock growth, create jobs and mitigate the social impact of the crisis. Beyond this, with determination on the side of all the Greeks, and with the full support of the European Union, we can transform Greece for the better: I would like to tell the Greek people that we shall succeed together.

There have been many calls for greater solidarity, for a kind of Marshall Plan for Greece. Let us recall that the assistance provided under the Marshall Plan amounted to around 2.1 % of GDP of the recipients. The total package of assistance to Greece, if you consider the funds, grants from the structural fund, the loans, the write-off of private debt, the total package of assistance to Greece is equivalent to 177% of Greek GDP! Yes: almost the double of the income Greece can generate in one year. This is a very visible symbol of the solidarity which lies at the heart of the Union. This shows we are acting, that we are making an enormous effort to help Greece stand on its own feet and we will continue to do so.

Honourable members,

We have learnt from the past. We cannot have growth mainly fuel by debt and imbalanced growth where one sector expands to the detriment of others. Growth has to be built on the foundation of competitiveness; it should be social inclusive and environmentally sustainable.

Let me give some examples of how we are moving the growth agenda forward for Europe:

First, Single Market. Further releasing the full potential of the Single Market. This is probably the largest engine for growth within the European Union. It gives European businesses unfettered access to other companies and half a billion consumers and allows them to develop the scale to compete globally. Getting the most out of a properly functioning Single Market is indeed economic policy par excellence. That is why the Commission has been working for the past two years to put an enhanced Single Market at the service of the Europe 2020 objectives.

So it is incomprehensible that Member States are still not fully implementing the growth-friendly legislation we already have in place. Full implementation of the Services Directive will produce immediate results and boost the European economy by 1.5%. The single market infringement rate in Europe is still too high. Again, if Member States are ready to move, this can deliver results fast. The Commission will present a range of ideas for improving Single Market governance and filling the implementation gap ahead of the June European Council.

And of course we also need to continue our work to further enhance the Single Market, indeed to complete the Single Market. The Commission has presented Single Market Act and I again urge the Member States and this House to play a constructive role in ensuring that the laws are adopted and come into force quickly. That is the only way for our SMEs and for our consumers to fully benefit of the Single Market. But I would like to confirm to you that later this year, the Commission will come with Single Market Act II to further take forward our efforts to unleash the full jobs and growth potential of the single market. At the same time we are working hard towards achieving the digital single market.

Second, there is, and it is important to remind it, the international dimension of growth. Our external policies need to focus on access to those markets that are growing faster now in the world. With Korea we now have a free trade agreement which stands to bring us 18 billion Euros in additional trade, and similar agreements are being negotiated with a number of strategic partners including India.

But let us not stop there. The United States is our largest economic partner; our trade relations are the largest in the world with a value of almost 450 billion Euros in 2011 and we have invested over a trillion Euros in each other's economies. Any further gains including through reducing non tariff barriers, would be significant for both sides. We are exploring ways in which to broaden and deepen these ties.

In the global economy the size of your market and the strength of your currency will determine your ability to compete, your capacity to shape the global economy and also your future prosperity. There is no strong economy without a strong currency; there cannot be a strong Europe without a strong Euro. It is therefore no surprise that those who oppose a strong Europe also do whatever they can to undermine the Euro.

Mr President,

Distinguished Members,

Our Europe 2020 strategy has a breadth of vision and a depth of substance which goes far beyond any one narrow perspective or single course of action. It also has the flexibility to adapt and to throw up new ideas and indeed be the basis for a new European initiative for growth.

In this respect investment is key. Investment at the European level is vital, especially at a time when there is little fiscal space at the national level. Of course, the Multi-annual Financial Framework is one of the main tools for delivering the Europe 2020 strategy: it is a tool for investment, for growth, for job creation across all the European Union from our capitals to our most deprived regions. So let us make it clear that we are for investment. We are for growth. That is why we need the MFF, and that is why we need, in some cases, to front-load some of the investments.

By investing in infrastructure, networks and research on a European scale, the European Union channels resources that help to complete our internal market, increase our efficiency, support the sustainability of our economy. I believe that – to boost growth – some of the investments must be front-loaded. This is why the Commission has proposed pilot project bonds, which the European Council agreed – in principle – in March. I like to see these project bonds as soon as possible, in the ground. And why today I recall that as I have already mentioned in this House – it was precisely on the 28th of September 2011 in the State of the Union Address: I am in favour, the Commission is in favour of an increase in the capital of the European Investment Bank.

Moreover, with our proposals for a financial transaction tax to contribute to the budget, we are also making clear that this budget is not only a budget for investment, but also for solidarity. It is also a question of fairness. And fairness is important for the support of the reforms that are needed in Europe.

Our strategy must ensure a fair spread of the benefits and burdens which reform will bring. It must be inclusive; the current crisis has thrown into sharp relief the question of social cohesion. The Commission and I do not believe that the European Social model is dead. We believe that it is an essential part of our social market economy. At the same time the crisis we face is not just a fiscal debt crisis, it is also a crisis of competitiveness, it is an economic crisis. And in order to sustain our social model, we need to pursue not just fiscal consolidation but also regain our competitiveness. So, competitiveness is key to sustain our social market economy.

Let me also say to you very frankly that I do not understand how it is possible that in this especially difficult moment for Europe, while we have in some countries, in many regions a real social emergency and indeed an increase of social difficulties and in some cases poverty, that some governments in Europe are now calling for cuts in European programmes, such as the Globalisation adjustment fund and the support for the very poorest in our societies. As I have said before, discipline must be accompanied by convergence, responsibility must be matched by solidarity. And I see that we are not doing enough in terms of solidarity at European level.

Monsieur le Président,

Mesdames et Messieurs les Députés

Nous devons montrer notre détermination face à ceux qui n'ont pas toujours l'intérêt de l'euro et de l'Union européenne comme objectif lorsqu'ils critiquent notre stratégie de sortie de crise. Et nous devons montrer notre confiance en ceux qui portent l'essentiel des efforts alors que nous réformons nos économies et mettons de l'ordre dans nos finances publiques.

Ces réformes sont importantes, ces efforts sont essentiels. Il s'agit de tourner la page sur des pratiques qui ont été très fructueuses pour quelques-uns mais très coûteuses pour tant d'autres, notamment les plus vulnérables de nos sociétés. Alors nous ne devons pas céder à la tentation de relancer nos économies sur la base d'un stimulus budgétaire qui créerait une fausse impression de croissance durable. Ce serait un retour aux erreurs du passé avec leur lot de conséquences que nous subissons depuis des années. Nous devons conclure la reforme du secteur financier et, à cet égard, la Commission a déjà présenté des propositions pour l'éloigner de la spéculation et de la création de nouveaux risques et pour qu'il retrouve pleinement sa vocation fondamentale qui est servir l'économie réelle et couvrir les risques économiques existants.

Pour renouer durablement avec la croissance et créer les emplois, nous devons maintenir le cap que nous nous sommes fixé. Nous ne devons épargner aucun effort dans la mise en œuvre des éléments de la feuille de route d'octobre dernier, qui est notre stratégie de sortie de crise.

Un des piliers de la feuille de route est, rappelons-le, le renforcement des pare-feux pour la Zone Euro.

Nous avons maintenant un accord qui renforcera les mécanismes mis en place pour soutenir les Etats membres en difficultés financières et qui entreprennent des réformes qui sont tout aussi indispensables que difficiles. Et je vous rappelle que le mécanisme européen de stabilité disposera d'un "callable capital" ("capital appelable") de 620 milliards d'Euro, supérieur à n'importe quelle autre institution financière internationale et que sa capacité de 500 milliards d'Euro est presque l'équivalent de celle du Fonds Monétaire Internationale, lequel s'occupe du monde entier. D'ailleurs, rappelons-le aussi – parce que certains ont tendance à l'oublier – que les États membres de l'Union européenne sont de loin le principal contributeur pour le Fonds Monétaire Internationale. Mais là encore il ne faut pas être complaisant. Moi-même et la Commission nous restons convaincus que pour assurer une véritable discipline budgétaire et convergence dans la zone Euro, il faudra une mutualisation de la dette publique.

Par ailleurs, la mise en œuvre du travail sur le Semestre européen se poursuit. Cette année, on aura pour la première fois une vision intégrée de la situation des Etats membres, notamment avec l'inclusion du mécanisme pour la correction des déséquilibres macroéconomiques. Les Etats membres sont en train de soumettre leurs programmes nationaux de réformes et la mise à jour de leurs programmes de stabilité ou de convergence. En mai, la Commission présentera, fondées sur son analyse de ces programmes, ses recommandations par pays ("country specific recommendations").

Je peux vous assurer qu'il s'agira d'un travail sérieux de la part de la Commission qui s'appuiera sur une approche véritablement intégrée. Et maintenant, grâce aussi à vous, nous avons les instruments que nous n'avions pas dans le passé pour ce genre d'exercice. La Commission n'hésitera pas à mettre les Etats membres devant leurs responsabilités pour assurer des réformes pour la compétitivité et aussi une croissance inclusive et soutenable.

Il est clair que la situation reste difficile, il est clair que les autorités nationales et nos concitoyens font des efforts considérables. Mais nous avons quelques exemples positifs montrant que ces efforts commencent à porter leurs fruits: par exemple, la Lettonie a démontré que c'était possible de faire un programme très exigeant de consolidation budgétaire et de retrouver la croissance. Nous constatons aussi une première relance des exportations en Irlande et au Portugal. Donc il y a effectivement des grandes difficultés, il y a aussi certains progrès. Il faut nous appuyer sur ces progrès.

Notre travail ne sera pas facile, et je ne vous ai jamais transmis un message de complaisance. Je ne vous ai jamais dit que la crise était derrière nous.

Notre travail conjoint doit se poursuivre avec acharnement et sérieux, cohérence, soutenabilité, persistance, détermination. Nous savons que c'est un travail de longue haleine sans solutions magique. Un travail pour garantir l'avenir de notre économie sociale de marché, un travail pour garantir le rôle de l'Europe dans le monde et pour répondre aux besoins et souhaits de nos citoyens. C'est ça l'Europe que nous voulons, c'est ça l'Europe pour laquelle nous luttons.

Je vous remercie pour votre attention.

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