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Olli Rehn

Vice-President of the European Commission and member of the Commission responsible for Economic and Monetary Affairs and the Euro

Europe's action plan for growth, employment and investment

European Parliament

Strasbourg, 22 May 2012

President Schulz,

Honourable Members of the European Parliament,

Ladies and Gentlemen,

We once again find ourselves at a turning point in the debt crisis. At the same time, the European Union is now witnessing a new level of debate about growth and how to achieve it – and that is definitely positive and indeed necessary.

From the outset, the Commission has insisted on a twin-track policy response that combines stability and growth. From the outset, we have combined concrete proposals for stability with concrete proposals for growth. These ideas are debated today. And the Commission is grateful that this house has supported those ideas since very early on. It is very good news that now that the Member States are also more willing to take action.

I see tomorrow's dinner of Heads of State and Government as an opportunity to seize the momentum for growth and as a major stepping stone to the European Council at the end of June.

Between the two Summits, the Commission will on 30 May present its Country-Specific Recommendations, addressing the specific economic challenges facing each and every Member State and the euro-area as a whole. On 30 May, we will also set out our line on implementing the Stability and Growth Pact in a growth-friendly and differentiated way, applying its in-built scope of judgement, which focuses on structural sustainability of public finances over the medium term and takes into account the fiscal space and macroeconomic conditions of each member state.

We will use these opportunities to urge Member States to deliver on the commitments they have made to strengthen stability, implement structural reforms and boost sustainable growth.

The Commission will urge Member States to continue to build the bedrock of economic stability. Pursuing sound public finances is not an option: it is a necessity. We can never have sustainable growth as long as we have unsustainable debt.

And we start to see a rebalancing of our economy. Deficits are falling across Europe. There is simply no other way to build confidence and cut borrowing costs. Every euro spent on servicing debt is a euro less for jobs and investments.

Heads of State and Government must also stand by their firm endorsement of the Commission's Annual Growth Survey. That is why President Barroso will urge them tomorrow to work closely with us in implementing our forthcoming recommendations under the European Semester of economic policy coordination. This key governance tool is helping to ensure that we are all working towards the shared goal of a growing and sustainable economy.

Honourable Members,

In our Schuman Day statement two weeks ago, the Commission called for accelerated implementation of the Europe 2020 strategy, which has been endorsed by each and every Member State, as a means of accelerating action for jobs and growth in the short term.

And this will be the key message President Barroso will bring to tomorrow's informal European Council. He will urge the Heads of State and Government to back a growth initiative that will serve as a catalyst for a faster and more robust recovery. The Commission will present it in more detail before the June European Council.

The Europe 2020 strategy is the agenda for the long-term health and sustainability of our economy. Meeting its climate and energy targets alone could create 5 million new jobs in Europe – putting almost one quarter of our unemployed people into work. But Europe 2020 must be for today as well as for tomorrow.

With the right political push, we can start to make a difference today. Let me give you just two examples.

First, we have asked Member States to give the Commission a mandate to negotiate with third parties on tax evasion and fraud. National treasuries lose revenues through tax evasion – losses they simply can not afford. And 25 Member States want the European Union to move ahead with these negotiations, but two again blocked it at the last ECOFIN Council, at a cost of potentially tens of billions of euros to European taxpayers. President Barroso will be clear again tomorrow evening: this is not acceptable.

Another example: we need to step up the pace of trade negotiations with key global partners. If Europe is to grow, it needs to ride the wave of global growth. Our exports to Korea shot up by 20% in 2011 following the entry into force of our free trade agreement. There are many more opportunities out in the world economy and we must do all we can to seize them.

There are many measures we can take quickly to strengthen our economy and send a message of confidence. Promoting public and private investment is a cornerstone of our growth initiative.

We will first of all propose that Member States commit a further 10 billion euros to the European Investment Bank. This could unleash many times that amount in new investment. The EIB could expand its lending volume, which is a quick and effective way of channelling badly needed stimulus to the real economy.

Let me recall that this is a proposal President Barroso put before this House on 28 September 2011 in his State of the Union address. Now there is momentum to get it off the ground, with a focus on financing innovative and competitive small and medium-sized enterprises, especially in countries and regions that need it most. The EIB and EU structural funds can also be used more effectively through limited risk-sharing with private investors.

We welcome the excellent progress in the negotiations with the Parliament and Council on our project bonds proposal, and look forward to an agreement in the trilogue meeting later today. We estimate the project bonds could unlock up to 4.6 billion euros of investment in infrastructure and innovation already in a pilot phase.

We will also urge an immediate agreement on our growth-focused budget for 2013, with agreement by the end of the year on the Multi-annual Financial Framework for 2014-2020. This will be an important signal in Europe's readiness to invest in its future, into job-rich green growth and innovation-based re-industrialisation of Europe. In truth, the MFF is our Marshall Plan for Europe.

And we will look at further optimising the use of structural funds. We want to invest better and to use the funds as catalysts to boost sectors such as renewable energy sources, which have great potential but are finding it harder to access funding. Likewise, we want to support education and training more effectively.

We will continue to work for a swift adoption of the Financial Transactions Tax proposal the Commission put forward last September [and we look forward to the outcome of tomorrow's vote in this House]. We will bring new detailed proposals in June on how its 57 billion euros a year of revenue could be used for targeted investment. The single market is our main engine for growth, but we need extra fuel to boost that engine.

On the structural side, there are many things we can do that cost little but can have a major impact on our economy. The Single Market for goods has opened up vast opportunities for economic dynamism. But we must be honest here – it is incomplete and imbalanced. It does not work for services, which penalises those Member States that most urgently need to catch up. It is also not bringing out the full potential of the digital economy.

President Barroso will tomorrow urge the Heads of State and Government to quickly implement the Single Market Act, starting with the European patent. It must be adopted in June. It is high time to clear the way for the bright innovators of today to become Europe's great entrepreneurs of tomorrow!

To keep up the pressure on implementation, the Commission will present a Single Market governance scoreboard in June, as well as proposals to get more out of the services directive. We will also present proposals for a Single Market Act mark II in September to further redress imbalances and ensure that those Member States that undertake bold structural reforms at home gain access to markets in other Member States.

At the same time, we will pursue our roadmap for financial stability. We have done a great deal already. The EU is in the lead in implementing the G20 commitments to strengthen regulation and supervision of the banking sector. The reform package will be complete in June when the Commission proposes a common framework for the recovery and resolution of banks and investment firms. We also need to see a swift agreement on the fourth Capital Requirements Directive.

And whilst pursuing this growth agenda, we must address the social emergency that many Europeans face today with the same determination with which we address the economic challenges. Poverty reduction is one of the key goals of the Europe 2020 strategy. But our endeavours in this field will only succeed if we achieve the strategy in all of its aspects.

Our focus is on Europe's most immediate social challenges. The most pressing challenge is of course unemployment, and in particular youth unemployment. In January the President announced the creation of action teams to mobilise efforts in the eight Member States with the highest proportion of young people out of work. He will present the results of this effort tomorrow.

Looking beyond that immediate horizon, I believe a long-term perspective for the future of the Economic and Monetary Union would be necessary to keep us all in the right direction. Therefore, we need to reflect what kind of European Union would be required to deepen economic and political integration, for instance, so that joint issuance of debt would make sense for all member states sharing the common currency.

The Green Paper on Stability Bonds from last November needs to be followed up soon, ideally with a medium- to long-term roadmap that outlines the necessary deeper fiscal and economic integration in order to minimise moral hazard and ensure fiscal sustainability – or in other words, the features of an economic (and political) union required to make mutualisation of debt rational.

Honourable Members,

Allow me to close with a word on Greece. The Commission's message to the Greek people is this:

We want Greece to remain part of the European family and of the euro. After living beyond its means for too long, the journey Greece is undertaking is difficult and demanding, but it is a journey we are taking together, in a pact of solidarity.

The Euro area has stood by Greece in all of its difficulties. We will continue to do so. Not only through the unprecedented levels of financial assistance contained in the two packages and the debt write-down that together equal to 33,600 euros per Greek citizen. But also through the many assistance and support programmes whose effective implementation depends on the determination of the Greek leaders and people.

I am talking about programmes to get structural funds working on the ground where they are needed. Loans for small and medium size enterprises. Support for young people without jobs. Technical assistance to reform tax systems and break down barriers for businesses.

We are ready to stand by Greece on its journey of reform. We want to stand by Greece.

This being said, Greece must remain determined to reform. We are convinced that there is no easier way. We are convinced that the alternative would be far worse. So let me use this opportunity to call on all responsible forces in Greece to use these few precious weeks to get the facts across so that the Greek people can make a fully informed and responsible choice.

Honourable members,

There is no silver bullet for economic growth. If there were, it would have already been fired.

The build-up of debts, deficits and imbalances in our economies did not happen overnight, it happened over many years.

And the readjustment we are now going through won't be concluded overnight. That is why it is so important to stay the course of sustainable and sound public finances.

At the same time, the Commission strongly supports the renewed drive for growth that is now sweeping across Europe. We are confident that there is now the political will and determination to move forward, starting with many of the proposals for sustainable growth that the Commission has already put on the table.

Now is the moment to go further with our actions for growth and to get them working at the service of Europe's citizens.

We count on you here in this House to help make it happen. There is no reason to wait. Indeed, there is no time to lose.

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