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European Commission

Olli REHN

Vice-President of the European Commission and member of the Commission responsible for Economic and Monetary Affairs and the Euro

Speaking Points by Vice-President Rehn at the EC-ECB Press Conference

EC-ECB Press Conference, Washington DC.

19 April 2013

Good afternoon. Our discussion this morning showed that there is a broad consensus on the policy agenda to tackle the common challenges we face. The global economy has avoided tail risks and financial market conditions continue to improve. However, the recovery remains uneven and progress is at different speeds.

In Europe, our overriding objective is to create the conditions for sustainable growth, and we are working hard on many fronts to achieve that objective, through:

  • structural reforms to boost competitiveness and job creation,

  • financial sector repair to get credit flowing again,

  • and, yes – consistent fiscal consolidation where necessary and at a pace that is appropriate for each country.

Thanks to this consolidation effort, deficits in the eurozone have halved since 2011, from around 6% to below 3%, we expect, this year. Now, we have received plenty of advice, also in recent days, on the pace of fiscal consolidation in Europe. Well, I will let you into a secret: the pace of consolidation in Europe has already been slowing down since last year. The increased credibility gained since 2011 as a result of progress in balancing budgets and the stabilisation effect of the measures taken by the ECB has made this possible. This year, in fact, the structural fiscal adjustment in the eurozone will be around ¾ of a percentage point, roughly half the level of last year; while in the US, it is expected to be around 1.75 percentage points in 2013.

Of course, there is more to fiscal policy than judging the appropriate pace of consolidation. In this context, I want to say that the Commission shares the view of G20 Finance Ministers that more needs to be done to combat international tax avoidance and evasion, in particular through tax havens. Last December, the Commission presented an ambitious and comprehensive Action Plan to fight tax fraud and evasion together with two specific Recommendations on aggressive tax planning and on promoting principles of tax good governance. Recent developments, as discussed at last week's informal ECOFIN in Dublin, reinforce the need for rapid action in this area.

We particularly welcome today’s endorsement of automatic exchange of information, and look forward to working with the OECD and G20 countries on developing new international standards on this. The EU has a wealth of experience in this area. The Commission looks forward to contributing this practical experience and expertise to the international debate.

I also want to take this opportunity to reiterate our commitment to build a Banking Union for the eurozone. Yesterday, EU Member States formally endorsed the political agreement reached last Friday on the Single Supervisory Mechanism.

The next steps will be the creation of a Single Resolution Mechanism, for which the Commission will put forward a proposal by the summer, and an agreement on the rules for direct bank recapitalization by the ESM. This is a decision for the finance ministers of the eurozone, and the Commission will continue to support the technical discussions underway and help to facilitate a rapid agreement by June.

Finally, we must do more to address the credit constraints facing businesses and households in southern Europe. The easing of market tensions since last summer has not fed through into improved financing conditions in the real economy. It continues to be much harder and more costly for a firm in Italy or Spain to obtain credit than for a comparable competitor in Germany or Austria.

As long as this is the case, recovery in the south will prove elusive. That’s why the Banking Union and the ongoing financial repair are so important. We are committed to seeing these processes through. But we will also to continue to explore other avenues to get credit flowing again, such as through public banks like the European Investment Bank, with which the Commission plans to work ever more intensively to address this emergency.


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