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Remarks by Vice-President Olli Rehn at the Eurogroup press conference

European Commission - SPEECH/13/701   13/09/2013

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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

Remarks by Vice-President Olli Rehn at the Eurogroup press conference

Vilnius

13 September, 2013

Thank you Jeroen.

Ladies and Gentlemen,

I am very glad to be back in Vilnius. Yesterday, I was at a conference in Riga with Mario Draghi and other colleagues, preparing the ground for the euro adoption of Latvia on 1st January 2014. Maybe next year we will have the same kind of conference in Vilnius. Of course, that will depend on whether Lithuania will be able to meet the well-known conditions of acceding to the Eurozone. As a long-time supporter of the integration of Baltic States to Europe, I am glad to note that these countries, Estonia, Latvia and Lithuania, have recovered well from the crisis and are growing robustly. I believe that this is a testimony to the enlargement of the European Union as a force of peaceful economic and democratic transformation of our continent.

Concerning the European economy, overall, the summer has brought encouraging signs that the European economy has reached a turning point. The second quarter GDP figures were somewhat better than expected, although pretty much in line with the Commission's Spring Forecast and, in line with that, a gradual recovery is taking root in Europe, which we expect to grow firmer in the coming months, stand on a more solid footing and pick up speed in the course of next year.

But certainly this is no time to shout that the crisis is over. That is clearly premature, and I see that that the key risk to this recovery is complacency; complacency in policy and complacency in terms of reforms. Complacency is a luxury that we simply cannot afford. Unemployment remains at dramatic levels in some countries of southern Europe. Many households and businesses, especially SMES, are still struggling to obtain affordable credit and therefore much more needs to be done to remove the bottlenecks of economic growth that are holding us back for the moment.

That’s why it is essential to stay the course of reform and, in some cases, step up the reform of our economies for sustainable growth and job creation. In this regard, we have three months of very intense work ahead of us, both in the Member States and at European level. By the beginning of October, those countries which received new Council Recommendations in July to correct their excessive deficits must take the necessary effective action to comply with those Council Recommendations. They also need to concretize their plans for fiscal structural reforms. By 15 October, euro area countries must present their draft budgets for 2014 for scrutiny to the Commission and to the Eurogroup. In November, the Commission will present a concrete detailed assessment of all of those policy measures, also taking into account our autumn economic forecast.

According to European law, our responsibility is to scrutinize and make sure that the EU Member States practice what they preach in terms of economic and fiscal policies and structural reforms. That is for the sake of sustainability of public finances and for the sake of sustainable growth and job creation.

I would also like to provide you with some forward guidance on the eurozone’s transition from crisis management to post-crisis management and post-programme arrangements.

In the coming nine months, the programmes in Ireland, Spain and Portugal are due to conclude. As you know, we also have important decisions to take concerning Greece.

I can tell you that there will be no single rule or uniform pattern to be followed here. We will need to look very carefully at what the optimal solution will be in each case to ensure a successful exit.

What is clear is that the objective in all cases will be to ensure financial stability; to strengthen economic recovery; and to enable successful programme exits for the countries concerned.

Our intention is to prepare the necessary decisions together our partners in the Troika, and of course within the framework of the Eurogroup so that these decisions can be taken in good time.

Finally, a word on the fifth anniversary of the collapse of Lehman Brothers, which tipped the world economy into the worst crisis since the Second World War.

The financial crisis was not an act of God. Who would have thought that in 2008 that we would now have agreed on a Single Supervisory Mechanism? And who would have thought then that we would have reinforced reforms and reinforced economic governance of the Eurozone, to the extent that we have done?

But we must never lower our guard. Policymakers in national capitals, at European level and in global forums like the G20 and IMF must remain vigilant so that the experience of the great financial crisis of September 2008 remains where it belongs: in the history books. 

Thank you


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