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José Manuel Durão Barroso

President of the European Commission

Speech by President Barroso: "Mission Growth: Ensuring Europe's future through Growth and Stability"

Mission Growth Conference

Brussels, 29 May 2012

Dear Minister Ole Sohn, representing the current Danish Presidency of the Council,

Dear Vice-President Tajani, my dear Antonio,

Dear single guests, Ladies and gentlemen,

Dear friends,

First of all let me say that it is a great pleasure to be here today and let me also thank Vice-president Tajani for organising this "Mission Growth" conference. It is particularly well timed: this issue was also at the heart of our discussions in the informal European Union leaders summit which took place last week, as well as in the G8 Summit in Camp David I attended two weeks ago. And certainly growth will be the main topic for discussion in the G20 summit in Los Cabos in some days.

And I am pleased to note that there is now a growing consensus, between political leaders and the public and within and outside the European Union, on the need for both stability and growth.

This is a message which I already strongly conveyed in my State of the Union speech in the European Parliament last autumn in September, when I called for a Union of stability and responsibility, but also for a Union of growth and solidarity.

The European Commission has pursued this twin track approach since the adoption of our Europe 2020 strategy for smart, sustainable and inclusive growth. The aim of this strategy that let's not forget, was endorsed by all the EU Member States and the European Parliament is to ensure that Europe exits the crisis stronger than before and better placed to face up to the challenges of a rapidly changing, globalised world.

And indeed the subtitle of today's event, "Europe in the lead of the new industrial revolution", clearly illustrates one of the key challenges we face. We are very lucky to have Jeremy Rifkin with us today, since Jeremy's latest book on "The Third Industrial Revolution" is, as always, a thought provoking contribution.

I believe that the choice of venue today is also inspired, despite of the traffic. This industrial space has been re-invented; bringing together innovative ideas to help support business development, all in a broader social context. This is indeed a concrete example of this kind of industrial revolution we try to promote.

To introduce this debate, I think know let me now develop briefly how I see Europe's strategy for stability and growth and for a renewed approach to industrial policy.

Ladies and gentlemen,

We have always made clear that we cannot have stability without growth and of course we cannot have growth without stability. It is also clear that there is now the political will in Europe to overcome some of our challenges in the short term.

We believe that we can shape the consensus and decide quickly on a number of high-impact initiatives which I also proposed at last week's summit to front load and accelerate: this could be a decisive step for the implementation of our growth and jobs strategy.

We need stability and pursuing sound public finances is not an option: it is a necessity. We will not have sustainable growth as long as we have unsustainable debt. We are starting to see a rebalancing of the European economy. Deficits are falling across Europe and this is the best way to build confidence and cut borrowing costs. We must remember that every euro we save on servicing debt is a euro available for jobs and investments.

To this end, we will continue pursuing our roadmap for financial stability, ranging from the finalisation of the pending proposals on regulation and supervision, like the Capital Requirements Directive, to banking recapitalisation and banking resolution. Indeed, we are now finalizing a very important proposal on legislation on a common framework for the recovery and resolution of banks and investment firms. With this, the European Union will be the first jurisdiction in the world to have delivered in terms of commitments set in the G20 regarding financial supervision and regulation.

We have also learnt the lesson that weak economic governance fosters instability. The European system of economic governance is now much strengthened. Tomorrow, we close the second European Semester – this new way of doing things in the European Union in terms of coordination of our economic policies. Tomorrow, the Commission will present its Country-Specific Recommendations, addressing the specific economic challenges facing each and every Member State, and we also present a recommendation regarding the euro-area as a whole.

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.

The Commission will monitor the impact of tight budget constraints on growth, enhancing public expenditure, and on public investment. If necessary, the Commission will give guidance on the scope for possible action within the boundaries of the European Union and national fiscal frameworks. In the coming months, the Commission will issue a report on the quality of public spending which will deal with this very important issue.

Looking further ahead, we believe that Member States, that are now with the Euro, will need to deepen their integration to attain full economic and monetary union. It is very important, even if you believe that it doesn't come immediately, to define the trend, the objective. It is very important also in terms of confidence for the investment in the Euro area now. We will support an ambitious and structural approach which should include a roadmap and a timetable for a full economic and monetary union in the Euro area.

Distinguished guests,

These measures to foster confidence through stability go hand in hand with growth enhancing measures. Here we have two main pillars: targeted investment and deep structural reforms. Each alone will help boost growth in Europe but taken together they are mutually reinforcing.

It is very important to understand that at the core of current problems in some of our Member States, there is a problem of competitiveness – better said: lack of competitiveness. We have seen a deterioration of competitiveness in some of our Member States. I say 'some of our Member States,' because if you look at the Euro area and the European Union as a whole, you see that we are, generally speaking, on a balanced relation with the rest of the world.

But indeed, the issues of growing imbalances in Europe, including the euro area, and growing imbalances in terms of the relation of some of the Members States with the rest of the world and critical aspects of competitiveness are key to understand the current problems. That is why deep structural reforms are needed if you want to keep our social market economy. That is why there is no easy way out of this crisis. That does not mean also the courage and determination to pursue ambitious structural reforms; some of those structural reforms are at the European level – for instance the deepening and indeed the completion of the single market – but most of them are indeed at the national level including for instance labour market reform. Without this our Member States will not regain the competitiveness that they need to compete in the global scale.

But investment is also necessary. Promoting public and private investment is a cornerstone of our growth initiative. We have proposed for instance that Member States commit a further 10 billion euro to the European Investment Bank, to unleash many times that amount in new investment. This is a proposal I made in my State of the Union address in September last year. I see that now there is a growing consensus on it. So I believe there is momentum to get it off the ground, with a defined focus on financing SMEs and also getting money to those countries and regions that need it most and that are least able to borrow elsewhere.

We are looking also in connection with this initiative, but not only this initiative at the further optimisation of the use of regional funds – investing better and using the funds as catalysts to boost sectors with great potential but harder access to funding, such as renewables, education and training. The Commission also welcomes the agreement found last week on our project bonds proposal to unlock up to €4.6 billion in a pilot phase. I expect that now there will be also an agreement for the future project bonds. As you know it is a concept that the Commission has put forward, it is a possibility to join the contribution of Structural funds with public funds from Member States and private funding for trans-European projects from energy and transportation to the digital area. This is critically important in terms of European dimension of growth.

At last week's informal summit I urged an immediate agreement on our growth-focused budget for 2013, expecting also the agreement by the end of the year on the Multi-annual Financial Framework for 2014-2020. This will be an important signal of Europe's readiness to invest in its future: in truth, this is our "Marshall plan" for Europe, with a particular focus on growth enhancing proposals, such as the €50 billion Connecting Europe Facility and the €80 billion Horizon 2020 research and innovation framework programme. It is important to consider these initiatives also as a way of promoting synergies among them. And it is precisely this general framework that can and should consider the renewal and reinforcement of our indusrial policy. There are many synergies between these different programmes and more and more we are pushing in terms of these linkages when we discuss growth and reforms in Europe.

Last but not least, we will continue to work for a swift adoption of the Financial Transactions Tax proposal the Commission put forward last September. We will bring new detailed proposals in June on how its €57 billion a year of revenue can be used for targeted investment.

Turning to structural reforms 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 transformed lives and opened up immense opportunities for business. But the fact that it is not yet fully working for services penalises first and foremost those Member States most urgently in need of catching up. It is also not bringing out the full potential of the Digital economy, a potential to generate benefits of over €100 billion a year. Indeed, speaking now about digital economy, I believe that the potential of the synergies between the digital and sustainable energy networks is precisely one of the most promising areas for deepening of our Single Market

This is why I also urged Member States to move quickly on implementing the proposals in the Single Market Act. To consolidate this drive, we will present a Single Market governance scoreboard this month of June, and make proposals to get more out of the services directive. We will also present proposals for a Single Market Act II in September, to further redress imbalances and ensure that those Member States undertaking difficult structural reforms at home gain access to markets in other Member States.

Whilst pursuing this agenda, we must ensure that appropriate attention is paid to the social consequences of the situation we are facing. I would in particular mention unemployment, most notably youth unemployment. The Commission is investing itself fully into the action against youth unemployment with a focus on the eight Member States hardest hit. Through the task forces established in January we have already in agreement with our Member States reallocated 7billion Euro to help fight youth unemployment and 470 000 young people are being helped to find jobs or receive on job training.

Ladies and gentlemen,

"An integrated industrial policy for the globalisation era" is at the heart of our Growth strategy. This should be no surprise, our industrial sector still generates over a quarter of Europe's domestic product and accounts for 74 million jobs when we look at manufacturing and related services.

There was a time when it was safe to say that industry produced something which could be put in a box, even if it would have taken a very big box indeed. Today, the interaction between manufacturing activities and services has changed the face of industry. With increased competition from around the globe, a key role for Information and Communication Technologies and finite resources, our products need to be innovative and our production methods sustainable.

In the face of this evolution, or even this revolution, the objective of our policy is to maintain and support a strong, diversified and competitive industrial base in Europe, offering well-paid jobs while becoming more resource efficient.

The main strands of Europe's policy are well known: to create a more favourable business environment, by cutting red tape, reducing obstacles to transactions and improving infrastructure; to speed up industrial innovation by ensuring the timely deployment and commercialisation of key technologies; to ensure that European firms benefit from globalisation through fighting protectionism and also having access to new markets and deeper access to some of our markets; and also to support industry as it transforms to face new challenges such as the transition to a low carbon economy.

Of course the role of innovation here is paramount; that is why we are linking industrial policy with innovation policy, improving the working conditions for developing and implementing new technologies, good services and business models, including of course a safer regulatory environment but also an earlier provision of regulations and standards, to create an internal market for new innovative products and services, as well as increased use of innovative public procurement.

And also we have to focus on skills for these innovations. That is why we need to improve the available skills base increasing the number of STEM – Science, Technology, Engineering and Mathematics graduates - fostering inter-disciplinarity, to promote entrepreneurship education and training, and to encourage women entrepreneurs. So there is in fact here also an important chantier for development of innovation linking it to industry.

These measures will have their greatest impact on growth in the medium and longer term. We know that some of these reforms take time. But precisely because they take time we should make them now and not procrastinate. Short term growth is however possible and we are working on that. That is why we are reviewing our industrial policy to see what can be done to reinforce our policy with actions which will immediately stimulate growth and employment. Areas we are exploring include facilitating access to capital markets, for example, by developing no-bank finance for SMEs; facilitating the take up of new technologies and innovations, including through speeding up the development of standards and improving market conditions for our economic operators, both in the internal market and in global markets.

Through measures such as these, and in diligently pursuing our longer term actions, we can ensure that European industry plays its part towards ensuring long term sustainable growth in Europe.

Distinguished guests, ladies and gentlemen,

We all know that there is no simple solution to promoting growth, no magic spell which will make it appear in a flash.

The elements which led to this crisis - the build-up of debts, deficits and imbalances in our economies - did not happen overnight; they happened over many years. Likewise 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 and to promote our indispensable structural reforms.

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

Now is the moment to go further with our actions for growth for the benefit of Europe's citizens. Now is the moment to demonstrate that "Mission Growth" is not "Mission Impossible" but it is "Mission Unstoppable" and that Europe is able to deliver.

I very much thank you for your attention and I wish you all the best on your work.

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