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European Commission

José Manuel Durão Barroso

President of the European Commission

Speech by President Barroso: "Ensuring Sustainable Growth: The challenges ahead for a stronger Europe"

6th Forum for the Future of Agriculture/Brussels

5 March 2013

Ladies and Gentlemen,

It is a great pleasure for me to be with you. I arrived slightly late because I had the historic visit of the President of Myanmar – the first time a President of Myanmar visits the European Union. My apologies, but it was indeed a very substantive meeting. And I also heard the last minutes of your panel discussion and let me tell you that on the next opportunity I would also like to participate in such a panel. As probably some of you know, I am really very committed, as well as the European Commission, to this issue of development in Africa and through our development policy cooperation, our trade policy, our support to regional integration and also the support for agriculture, I believe there is a green revolution going on in many parts of Africa. And we are also proud to have made some contribution to that, namely through the food facility that the European Union announced some years ago. I know it was a very concrete support to many many farmers in Africa.

But let me also address the more general topics that you have proposed.

I think it is the right time to discuss about Europe. Europe is going through challenging times. I believe we have come through the worst of the crisis. But we are not yet fully out of it and we face the daunting task of completing what we have started as a policy response to that crisis. We must continue the drive for reform to make our economies more competitive and our public finances sound and sustainable.

That is what we need if we want to lay the basis to generate jobs for our people, create prosperity and share it across our societies and also take care of those in need – because this is at the core of our social market economy in Europe.

Reforming to become better and stronger: this is something the agricultural sector is very much a part of. It is what the Common Agricultural Policy has been doing for many years.

The timing of today’s conference is fitting, because the debate on the future of agriculture gained a new momentum: just a few weeks after the Heads of State and Government reached political agreement on the budget for the next 7 years and the negotiations between the Council and the European Parliament are gearing up; just a few days before key meetings for the CAP reform both at the European Parliament and at the Council.

Ladies and Gentlemen,

Dear friends,

To ensure a better future for farmers and for all European citizens we need all our policies to pull in the same direction and support the same overall objectives.

The CAP has a major role to play. It is a truly European Policy, and its success is so evident that it often goes unnoticed. Without the CAP, we would have had 27 different agricultural policies. Some of the friends of the internal market sometimes tend to forget what would be the consequences of having the fragmentation of the agricultural market in Europe with 27 different policies. Working together in a common market with the CAP tools, we can get more value for money.

We have now one of the most competitive farming sectors in the world. And it lays the basis for the agri-food and drink industry, a leading industrial branch which account for 6% of EU gross domestic product, 715 billion euro of added value, 15 million companies and 46 million jobs.

The CAPs success is linked to its proven capacity to adapt. That is why I am confident that we will also deal well with one of the most sensitive aspects for the future of agriculture: ecological sustainability.

There is a need to match the growing food demand based on a balanced technological progress, and at the same time there is a need to protect our environment and adapt to climate change. The case for action is clear: the degrading quality of the soil and the more frequent extreme weather conditions in all parts of Europe and in the world with floods, drought and new pests and diseases are day-to-day proof.

That is why we are driving the genuine greening of the Common Agricultural Policy. I know that there are some concerns in the farming sector. I can assure you that we are engaged in making this change as simple as possible for farmers. I am convinced that for many economic sectors, but in particular for the farming sector, there is no future competitiveness without integrating the environmental challenges, without a reasonable use of our natural resources, without care for biodiversity.

Ladies and gentlemen,

Sustainability is about dealing today with the challenges that we face tomorrow. It means making ourselves fit for the future. And it is, therefore, the bedrock on which a prosperous society is build: confidence.

Confidence that you will find a job; confidence that you can keep it; confidence that your savings are safe; that the money you invest will have a return; that your pension will be paid.

Restoring confidence is therefore at the essence of Europe’s strategy to address the economic crisis. To do so, we are tackling the root causes that made us vulnerable so that we come out of the crisis stronger.

Our strategy is therefore based on several strands, not one as it is sometimes suggested: the repair of the financial sector, fiscal consolidation, structural reforms for competitiveness, targeted investments for growth, and strengthening economic governance.

We are following a path of fiscal consolidation, because the crisis showed that growth fuelled by debt is not sustainable. In fact, it was what I call artificial growth: growth based on a financial bubble which fed a bubble of government debt and a bubble of private borrowing that exploded making us vulnerable in the financial markets.

We are putting in place the basis for a safe and sound banking sector that serves the real economy's needs and that also ensures fairness. When bankers make mistakes it should not be taxpayers who pay the bill. This is why we are breaking the link between bank losses and sovereign debt.

This is why we are putting in place rules and oversight that will avoid that the same practices we have known in the past repeat themselves. This includes stricter capital requirements, common deposit guarantee schemes to protect people’s savings, and regulation of bank bonuses, short-selling, derivatives, hedge funds and many other risky products and practices.

The recent agreement between the Member States and the European parliament on the package of measures, what we call Capital Requirements Directive IV, including capping bank bonuses, shows that the majority in Europe share our position.

Structural reforms and measures to promote growth at EU level, for instance through the further steps we are taking to release the potential of our single market, are designed to increase the competitiveness of our economies. Because this is key – how can we be more competitive in the 21st century when we now have new competitors and we need to adapt if we want to keep the basic principles of our economy and also our model of society.

Major efforts have been made, and I would like to mark specifically the efforts that have been made in the countries most affected. What is happening now in Ireland, I was there some days ago, or my own country, Portugal, the efforts made in Greece or after the bank support in Spain – all these reforms were unthinkable some years ago and now they are happening. They are happening, because there is a determination of the governments to restore competitiveness in those countries. And the same can be said for many other countries.

We are beginning to harvest the first fruits of this hard work. The markets are today more stable and there are signs that confidence is starting to return. But of course we should avoid any kind of complacency.

The indicators for consumer confidence and for business confidence in the euro area both improved. Euro area government borrowing costs have continued to decline, particularly since last summer.

The other good news is that budget deficits are expected to come down to the 3% of GDP limit set in the Stability and Growth Pact by the end of 2013. We hope that will happen. Since their high in 2009, budget deficits have come down by half and are now lower than the deficits of the US and Japan.

But we are not there yet.

There are unacceptably high rates of unemployment in many Member States, and growth rates remain depressed. The winter economic forecasts which we published two weeks ago were disappointing, setting growth close to 0% this year. But quarterly growth should return to positive territory before mid-2013 and strengthen considerably.

This reaffirms what the Commission has said many times: we have come through the worst of the crisis, but it's not over yet and we should keep our commitment to the needed reforms. While major reforms are paying off, evidenced by the improvement in economic sentiment, this is not yet feeding through to the real economy – to banks, consumers and companies, who are not yet lending, spending or hiring.

Ladies and gentlemen,

Above all, our long term growth requires investment, and investment requires confidence in the future. We therefore need a vision of Europe, a sense of purpose that has to be supported by the political will of our Member States. It cannot be done, as I have been repeating, only here from Brussels. We need the commitment of all our Member States. The European Union is not just Brussels or the European Parliament in Strasbourg. The European Union is about our collective decisions.

This is why I have laid out some key elements which the Commission has been developing and presented as a blueprint on a deep and genuine Economic and Monetary union. The so-called markets asked for that. They asked for this roadmap. Investors need to know with clarity about the future, the way we are going. They understand that things cannot happen from one day to the other, but they need this vision and this well-defined path.

Our Blueprint is part of our effort to build that vision. It raises the hard questions on how to strengthen cooperation and integration in the financial, fiscal, economic and also in the political field. And it provides some of the answers and aspirations as we see them - some concrete and short-term, others more ambitious and long-term. Always with a concern that we have which is the need to support the deepening of the Economic and Monetary Union. This is indispensable for those countries with shared currency. It is critically important that more integration happens and that at the same time we keep the integrity of the Single Market and the European Union as a whole, the European Union that has today 27 and very soon it will welcome its 28th member.

Our vision demands a broad and profound political exchange of ideas. The moment is right for such a debate. I expect the next European elections will be an occasion to take this debate further. We must bring Europe closer to the people by debate, by providing a better understanding for what is at stake.

The measures which we have been taking, even the most urgent have one thing in common. They all fit within the logic of our blue print and all even the most immediate represent steps towards our ultimate objective of long term sustainable growth.

We have already started working on some concrete short-term measures to be delivered by June for the European Council, such as a mechanism to better co-ordinate major economic reforms across Europe and a so-called "Convergence and Competitiveness Instrument" (or CCI) that would combine specific contractual arrangements with Member States combined with a focused and targeted financial support.

This instrument represents the essence of our approach, in which we want to make sure that discipline and responsibility go hand in hand with solidarity and convergence. Indeed: we need both at European level. There are some in Europe that only speak about solidarity. They forget also that they need to show responsibility. Others only speak about responsibility, forgetting that they need to show solidarity. It is not a question of choosing between solidarity and responsibility; both are needed if you want to have a genuine Economic and Monetary Union.

Last but not least, we are using all of the tools at our disposal to strengthen the social dimension of the economic and monetary union.

In particular unemployment, especially youth unemployment is often seen as an urban phenomenon, but it has a very strong rural dimension as well. We are putting every effort into combatting it.

Last week, our proposal on the Youth Guarantee was adopted by the Council of Ministers in Brussels. This is about giving hope to young people and assuring them that they will not have to spend more than four months out of useful employment or employment-related training activities.

To support this work the new Multiannual Financial Framework, our 7 year budget, will include a specific instrument. Indeed we have now put there 6 billion euros as a contribution for this programme. The Youth Employment Initiative to help implement the Youth guarantee and other actions aimed at reducing youth unemployment.

This instrument was one of the results of a long hard negotiation between Member States resulting in a political agreement which now forms the basis of negotiations with the European Parliament.

It is no secret that I wished the agreement were closer to the Commission's original proposals but we have to accept that a compromise between 27 is never easy. Decisions have to be taken by unanimity. The good news is that many of the pro-growth aspects of the Commission proposals remain and will benefit from a real increase in funding compared to the current period. These measures will benefit Europe as a whole but some of them, notably support for research and development, [what we call Horizon 2020] and connecting key infrastructures, transport, energy and broadband across Europe through our Connecting Europe facility will also be of specific benefit to you, to all those who are working in the European economy.

It is clear in our interconnected Europe, in our interdependent world that the challenges facing each of us are the challenges facing all of us.

The manner in which Europe responds to these challenges will therefore determine our common future. The elements I have presented to you today those targeted at agriculture, those aimed at overcoming the crisis and those which are part of our broader objective of long term sustainable growth and jobs are all elements in a single coherent response. And when we all pull together we can see the first positive results of this response.

Farmers know better than most that nothing can come without hard work, without discipline and without determination. It is these qualities which Europe needs in abundance and I believe with this determination we will be able to overcome the difficult situation which we have been facing.

I thank you for your attention!

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