Vice-President of the European Commission and member of the Commission responsible for Economic and Monetary Affairs and the Euro
Speech: Remarks by Vice-President Olli Rehn at Eurogroup press conference
11 February 2013
Thank you Jeroen.
I will start with the Winter Economic Forecast, which will be presented on 22 February and will give a clearer picture of the economic outlook for this year and next year. It will also give indications on compliance with fiscal targets and, subsequently, the basis for policy advice, both on fiscal and macroeconomic policy.
Without going into concrete detail of the economic forecasts, which we are still working on, we can say that since the last Eurogroup we have seen a continuation of the steady normalisation of market conditions that has, in fact, been underway since the autumn. This trend indicates that forward-looking actors are increasingly pricing in the beneficial effects of growth-enhancing reforms and the progress that is being made in fiscal consolidation, and also of the rebalancing that is currently underway in the eurozone economy.
Our latest survey indicators also reflect the signs of growing confidence. And the fact that private capital has begun to flow back into the southern eurozone Member States is, of course, good news.
At the same time, the short-term outlook in the real economy remains weak. The unemployment situation is very serious and is likely to remain so in the coming months. Industrial production remains weak and credit conditions are still difficult. And with public debt in the eurozone at around 90% of GDP on average – a level at which it has been shown to reduce economic dynamism and growth – it is clear that we need to maintain a steady pace of fiscal consolidation. We cannot lower our guard. There can be no deviation from the course of reform.
We will come back to this on 22 February, when we will have more precise figures.
I can also tell you tonight that a positive conclusion in the talks between the Commission, the European Parliament and the Council on the so-called Two-Pack to reinforce economic governance is within reach. We should definitely not miss that chance.
These two regulations will further enhance budgetary surveillance and policy coordination within the euro area. They are important in their own right, but also because they are an essential foundation for further progress in rebuilding our economic and monetary union.
Finally, with the completion of the ninth review mission last week, Ireland has reached the three-quarters mark in its programme. Of course, we know that Ireland still faces important challenges. But there is growing confidence in the prospects for Ireland to exit the programme as planned, as reflected by the steady improvement in market conditions for Irish bonds. The Commission stands by Ireland and its people and we support them in this objective.
A major step towards securing this objective was taken last week with the decision by the Irish authorities regarding the Promissory Notes. This has further boosted market confidence and will certainly help to facilitate a successful outcome.