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European Commission

José Manuel Durão Barroso

President of the European Commission

Speech by President Barroso at the European Parliament Plenary Debate on the European Council 28 – 29 June

Plenary session of the European Parliament/Strasbourg

3 July 2012

President of the European Parliament,

President of the European Council,

Honourable Members,

The President of the European Council has just made a comprehensive presentation of the results of the European Council conclusions.

I would therefore like to focus my presentation on the economic and financial issues, many of which I have presented to this House and discussed with you previously.

This European Council and Euro area summit have delivered results. They have delivered a set of measures which should strengthen confidence in Europe's financial stability and pave the way for the substantial work which is still needed.

It has done this at a very difficult moment. As I have said before the European Council that this is a defining moment for Europe. And indeed the sense of urgency was very present throughout the European Council even if different governments were under pressure for different reasons. And as the causes of this pressure differ, so do preferences on the potential solutions.

Yet despite those difficulties this European Council and Euro Area summit have for the first time tackled all the elements of a comprehensive response in one and the same meeting: namely by agreeing on measures to boost growth and jobs, by setting out the next steps for further deepening of Economic and Monetary Union and by deciding on short term stabilisation measures.

The Commission has always argued that consolidation must be accompanied by sustainable growth created by structural reforms combined with targeted investment. It was therefore important that Heads of State and Government decided on the Compact for Growth and Jobs.

This compact is based very largely on proposals put forward by the Commission and on ideas defended by this House, some of them since last year or even some years before. It turns intentions into concrete action with financing commitments, and sets out the levers for mobilising policies and funds – both at the European level and at the national level.

I am very pleased that on the EU level, elements I have long been advocating are now becoming reality: namely boosting the lending capacity of the European Investment Bank. I remember when I mentioned this here in the State of the Union address last year in September, Member States were opposed. Now they have agreed. Launching the first phase of project bonds is a proposal of the Commission that initially received a great scepticism, but was now approved. And redirecting a certain amount of structural funds towards supporting in particular SMEs and young unemployed people. Indeed the unemployment situation in Europe is by far the most dramatic and urgent issue we should be able to address.

At the same time, there is the recognition that we have important work to do to realise the full potential of the Single Market, in particular in digital and network industries. Following the Single Market Act the Commission will bring forward a further package of measures in the autumn, the Single Market Act 2 for this work to go on uninterrupted.

So this of course is not the end of the efforts that need to be made. Legislation needs to be proposed, adopted and implemented. Action will be needed not from one institution on its own: all of us, Commission, Parliament and Council, need to work together, and work together fast.

This was recognised last week and the conclusions acknowledge the need to improve cooperation to ensure the timely implementation of the growth compact. This will hopefully allow us to move towards an inter-institutional agreement to prioritize and speed up the relevant pieces of legislation as I have proposed in this House some weeks ago and as the European Parliament President made it very clear in his offer to the European Council.

I really expect such an agreement to be swiftly concluded. It would be an additional element of commitment and credibility on the delivery of our policy plans.

The European Council also generally endorsed the Country-Specific Recommendations effectively closing the 2012 European Semester.

This year the semester has come of age with real multilateral discussion. It is only natural that on some issues, there was a vigorous discussion – even when the evidence of loss of competitiveness inside the Single Market and internationally makes a clear case for action in the very interest of our citizens and their jobs.

The debate shows that the exercise is not just a technical and economic one. It is truly political.

Through the debate in the European Council, the awareness among Heads of State and Government that we cannot separate the debate on growth from the debate on the EU budget has also increased. The EU budget is our most important instrument for targeted investment and is an indispensable tool for growth and jobs in Europe.

A long and complex negotiation is still ahead of us, but there is now momentum for a substantial outcome in reasonable time. This house has a full and vital role to play in this process, and the Commission will continue to work very closely with you.

It would indeed be a strong political and economic signal if we could reach agreement on the MFF by the end of this year.

I am aware that this Parliament will want to work not only on the expenditure side, but also on the revenue side.

I have already spoken about the overall developments on the Financial Transaction Tax in the previous debate. Let me just reiterate in this context our conviction that moving to enhanced cooperation on the FTT does not mean that the debate on the FTT as an element of a new own resources mix is closed, on the contrary.

Honourable members,

Looking to the future, this European Council was able to define, on the basis of the report prepared by its President together with the President of the European Commission, the President of the European Central Bank and the President of the Eurogroup, the direction that further work must take on the creation of a genuine economic and monetary union.

We all know that this is an undertaking that has to be built step by step over several years. This European Council has now asked for a specific and time-bound road map to be worked out by the end of the year. And it has endorsed this aspiration collectively, even if it is clear that not all Member States will want to be part of the ultimate outcome of the process. A stable Euro is in the interest of the Union as a whole. The process must therefore combine the necessary deepening of the Euro area and its openness towards the Member States who want to join the Euro with the necessary safeguards for those who have an opt-out.

In the Commission's view we should start making the genuine EMU a reality as quickly as possible. We must in particular explore all that can be done on the basis of the existing treaties as a matter of urgency.

In support of this, Heads of State and Government gave a clear commitment to the realization of what the Commission has been calling a "banking union", and we have done it already in our European Semester Communication.

The "banking union" will be designed to fully address the structural shortcomings in the institutional framework for financial stability. As the aforementioned report puts it, addressing these shortcomings is particularly important for the Euro area given the deep interdependences resulting from the single currency. This must of course be done and preserve the unity and integrity of the Single Market in the field of financial services, whilst allowing for specific differentiations between Euro and non Euro area Member States on the parts of the framework that are preponderantly linked to the functioning of the EMU and the stability of the euro area rather than to the Single Market. Let me emphasize that these differentiations can of course not go just in one way. Because it is so important, I want to make it crystal clear: They must respect the opt-outs from the Euro area. But they must also respect the fact that other Member States not yet in the Euro will want to join as soon as they meet the conditions.

During the European Council I confirmed that the European Commission will bring forward proposals under Article 127 regarding the conferral upon the European Central Bank of banking supervision tasks. Strengthening our banking supervision became a central element of the consensus around this agenda.

We will work out the detailed approach and its place in the wider architecture as a matter of priority and look forward to discussing it with all stakeholders, including of course this Parliament.

I believe a banking union is an indispensable step.

But a genuine EMU must go further. We need to build a fiscal union, a reinforced economic union, and take steps towards a political union. This is the logical consequence of the need for deeper integration to match our growing interdependence and need for financial stability.

As we recognise that greater solidarity requires greater responsibility. We also understand that this requires more democratic legitimacy and political accountability. I need not repeat what I have said about this matter just a month ago. The Community method and the role and tasks of the EU institutions must be the starting point for all further improvements in this respect. And let's be frank, it would be strange to say the least that, when we are discussing the future of our union including its democratic and accountability aspects, the democratic institution that directly represents European citizens, the European Parliament, is not closely or directly associated to all decisions.

Honourable members,

It would not have been credible to address medium term and long term issues and not address the short term challenges we face.

Here, the Euro area statement takes great significance. Let me underline the importance of this statement having been endorsed by all 27 member states. This is a strong message and has been perceived as such by the outside world.

The first measure is to allow for the direct recapitalisation of banks by the ESM under appropriate conditions once a single supervisory mechanism for the Euro Area is in place. The Commission's intention to swiftly adopt a legislative proposal on the basis of Article 127 is also key in this regard.

Secondly, we have reached an agreement to waive the seniority of future loans for Spain's financial sector recapitalisation under the ESM.

Thirdly, we agreed on the possibility of the flexible and effective use of all instruments for all Member States respecting their obligations under the European semester, that is to say the Country specific Recommendations, the rules under the Stability and Growth Pact and the Macro-economic Imbalances Procedure. These decisions represent the result of the recognition of the need for solidarity with responsibility.

The Commission will work without delay on implementing them over the coming weeks and months.

After this European Council, and provided that all Member States will stick to the commitments that were made in full, we will be better equipped to face the serious challenges ahead.

However, let us recall that all of this is work in progress. There is no quick fix and magic fix, and there will be no magic solutions. The magnitude of the agenda of the European Council illustrates the magnitude of the work that is still ahead.

President,

Honourable Members,

This European Council has pulled together many separate ideas which have been discussed in the past and I believe the result is greater than the sum of its parts. It does not mean that the crisis is over, far from that. But it does mean that there is now an expression of the political will to move ahead, to respond to pressing short term issues as well as to map out a vision for Europe in longer term.

And the contributions of this House for this were great, and we welcome them.

This is why I count on our close and intense cooperation also in the times to come.

And let me end on this – while there was progress in the recognition that there is a need for a stronger Europe there was also very significant resistance to further steps forward. But there is a resistance precisely because there is movement. And I want to reiterate my confidence that together we will be able to make the European Union emerge stronger from the crisis and be able to better respond to the aspirations of its citizens.

I thank you for your attention.


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