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Vice-President of the European Commission and member of the Commission responsible for Economic and Monetary Affairs and the Euro
Vice-President Rehn's remarks at the ECOFIN
ECOFIN Press Conference/Luxembourg
15 October, 2013
I will make just two points.
I reported to Ministers on the economic situation while wait for our autumn forecasts on 5 November. I also reported on the experiences from the G7 and the G20 as well as IMF meetings in Washington that took place towards the end of last week. Europe's economies, as you know are at a turning point. We have a subdued modest recovery this year, and we will be moving onto a stronger footing next year. We can also expect improving employment in the course of next year, 2014. The economic recovery is, in terms of its composition, more broad-based than previously, so that the external component or net exports and domestic demand are both being strengthened but, at the same time, there is significant divergence amongst the Member States, including still unacceptably high levels of unemployment in many EU member States.
On the SME Initiative, first I want to recall why this initiative was put on the table in the first place. SMEs are the backbone of the European economy. Yet SMEs, in parts of Europe, especially in southern Europe, still face excessively tight credit conditions, which is holding back investment that is necessary for a sustained economic recovery in growth and employment.
A key benefit of the Banking Union we are currently constructing will be to reduce this financial fragmentation. But before this systemic solution is in place, for which my colleague Mr Barnier has worked very hard and successfully, we need to take measures to get credit flowing quickly. In June, the Commission, together with the European Investment Bank, put on the table a convincing initiative to achieve this objective. Then, the European Council, Heads of State and Government called for an agreement on the proposed instruments without delay with a view to having this in place as soon as possible, latest by the beginning of next year.
I welcome the fact that Ministers today in the ECOFIN have endorsed the SME Initiative, even if the Commission would have ideally liked to see a greater level of ambition. I now hope that the European Council will give its final approval to the initiative next week, in the Summit, so that we can start delivering on our commitments to European SMEs as soon as possible to see a reduction of borrowing costs and stronger investment for the sake of sustainable growth and job creation.
My second point concerns productive investment, especially the issue of how public investments which support sustainable growth can be accommodated within our fiscal rules. Following repeated requests from the European Council, the Commission has explored this issue very carefully indeed. I set out our conclusions in a letter to Finance Ministers on 3 July. I don't want to go into detail on that, but just remind you of the key conditions, they apply to Member States that had economic growth clearly well below its potential.
Second, the 3% rule of fiscal deficit must not be breached and the public debt rule of the six pack legislation must be respected. And third, this needs to be focused on co-financed projects with European Structural and Cohesion policy, Communication and the Connecting Europe Facility. These must have a positive, direct and verifiable long-term budgetary effect. These are the keys conditions of the investment clause. I was listening very carefully today to the discussion among the Ministers, and it seems to be that the Ministers are somewhat divided, however, since the Commission has acted on the basis of a clear and unequivocal mandate, given by the European Council, I can confirm that we will proceed on the basis I have just set out and, as I wrote in my letter to the Finance Ministers. In other words, the Commission will take into account public investment plans for productive investment related to co-financing of European projects, under these specific conditions and within the clear limits set by the Stability and Growth Pact, when we assess of Member States’ draft budget plans for 2014.
This is of concrete importance, not least today, because today is the last day of submission of draft budgetary plans by Member States, especially of the euro area Member States to the Commission. Today, I clarified to those Ministers who will use this investment clause, so that they are working on the basis of precise and relevant information and they know that they can, in case they fulfil the conditions and they want to move forward on this, they can then apply this investment clause in their budget for 2014.