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José Manuel Durão Barroso

President of the European Commission

Opening remarks by President Barroso on the next steps for stability, growth and jobs

Press conference

Brussels, 30 May 2012

Let me start with some words in Italian.

Lasciatemi esprimere, a nome dell'intero Collegio ed a nome mio, le nostre condoglianze alle vittime del terremoto più recente che ha avuto luogo in Italia, il 29 maggio.

La Commissione europea è profondamente rattristata ed esprime la sua piena solidarietà ai cittadini italiani.

Nell'ambito delle nostre possibilità siamo pronti ad aiutare concretamente l'Italia a far fronte alle conseguenze di questa e delle altre recenti catastrofi naturali.

Il Commissario europeo alla politica regionale, Johannes Hahn, si renderà nella regione d'Emilia Romagna il Domenica 3 giugno. Lo accompagnerà il Vicepresidente Antonio Tajani.

Ladies and gentlemen,

The Commission has just adopted its most important package of economic proposals of the year.

We have made a health check of the budgetary and economic situation in each of our 27 member states.

And we have proposed a treatment – specific recommendations for the reforms that need to be made to deliver stability, growth and jobs.

You have nearly 1500 pages of detailed analysis underpinning the country specific policy guidance that we are presenting. Vice-President Rehn as Commissioner for Economic and Monetary Affairs and Commissioner for the euro, together with Commissioners Andor and Semeta will present this package in more detail. More concretely, Vice-President Rehn will focus on any country-specific issues that you will want to raise in terms of public finances. I will focus in my presentation on what this package means in the broader political context and what it means for the way forward in Europe for stability and growth.

Our recommendations are tailored for each Member State, but form part of a coherent approach to rebalancing the European economy.

In some areas we have made good progress – I can say the medicine is beginning to work: public finances are starting to improve, imbalances are beginning to be addressed and rebalancing is underway, particularly by adjusting costs to productivity levels. But we are not there yet in terms of our goals, so we now need to redouble our efforts, at both the national and European levels. We need to move further and faster.

At national level, where do we stand?

The first thing to say is that member states have clearly taken last year's recommendations seriously. Genuine efforts have been made to implement last year's recommendations.

On public finances, we are clearly moving in the right direction. On average, deficits are falling. Now efforts must continue and in several cases fiscal consolidation should be more growth-friendly.

Member States are taking action to put their budgets back on track. Today I'm pleased to say that we are recommending that two member states Germany and Bulgaria be taken out from the excessive deficit procedure.

We are also recommending that the suspension of the cohesion fund allocation for Hungary is lifted as Hungary has now taken effective action to correct its excessive deficit.

In the area of structural reforms, many member states have made serious efforts over the last year, but more is needed. These reforms are indispensable to boost competitiveness and create the conditions for a return to sustainable growth Today's recommendations are designed to give direction to the next wave of reforms.

As part of this year's exercise, we have undertaken in-depth reviews of twelve countries showing signs of macro-economic imbalances. These reviews conclude that imbalances do exist and need to be addressed swiftly.

Particular attention should be paid to unemployment, especially youth unemployment. Current levels are dramatic and unacceptable.

While there is no quick fix, much more can be done to invest in training, better match skills to labour market needs and to shift the burden of taxation away from labour. These measures may not bring immediate results, but they will ensure that, when growth returns, it is job-rich growth that will reduce unemployment.

To supplement the national action, and many of those decisions have to be taken and implemented at national level, the European level can and will also play its part.

As you know we have put our proposals for growth on the table, some of them already for several months. They are about opening up services and energy markets, creating a true digital single market, investing in essential infrastructure, promoting research and education, accessing fast-growing markets around the world. This is the kind of stimulus that Europe can provide.

There are three things I would like the June European Council to deliver and I will do my best so that the European Council in June delivers that.

First, a clear endorsement of the country specific recommendations, without falling for the temptation to water them down.

Second, agreement on a growth initiative that takes forward among others the numerous ideas we have proposed over the last eighteen months. And I can quote: project bonds, the EIB lending capacity increase, the optimisation of the Structural Funds. These are concrete steps for quick measures to increase growth in Europe.

Third, I expect the European Council to accept that if Heads of State and Government want to increase growth, we need a European budget that – while tight and comparatively small - has the means to invest for the future, to invest for growth and jobs. When Member States agree on goals for the European level they should also be able to agree on the means to achieve these goals.

Finally, and I think that this point is especially important, we intend to look at the further steps we need to take towards a full economic union to complete our monetary union. The Commission will advocate an ambitious approach. The "building blocks" could include among others a banking union with integrated financial supervision and single deposit guarantee scheme. And as you know our ideas on stability for bonds are already on the table.

The pace and sequencing of these elements will need to be decided. We know that some of those decisions cannot be taken immediately, some require also from a legal point of view very important steps. But the fact the EU leaders, namely at the euro area level agree on deeper economic and financial integration is a very important signal in terms of the solidity and irreversibility of the euro.

I would like also to see a deeper reflection on how to give more democratic legitimacy and accountability to further integration moves.

We need to show our determination to go further. Sizeable challenges remain, and sustained efforts are required as is clear from today's package, before we can say that the crisis is behind us. It is very important for all the European citizens to understand this: there is no magic bullet, there is not going to be miracle solution, these issues take time and they require sustained effort and coherence. But we remain convinced of the benefits that our common currency has delivered and of those it will deliver in the future. And we are confident in Europe's ability to overcome this crisis and emerge stronger.

I thank you for your attention.

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