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“EP Plenary debate on the preparations for the euro area summit”

European Commission

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

“EP Plenary debate on the preparations for the euro area summit”

European Parliament

Strasbourg, 17 September 2014

Honourable President and Members of the European Parliament,

Ladies and Gentlemen,

Thank you for the opportunity to present to you today the position of the European Commission on the preparations of the euro area summit taking place on the 24th of October, on the occasion of the European Council.

Preparations for the summit are still at an early stage. As such, I very much look forward to hearing your views here today on how we can work together to deliver sustainable growth, create jobs and secure welfare for our citizens.

We are currently facing formidable challenges that only serve to underline that we have to do whatever it takes to deliver robust, sustainable growth and jobs in Europe.

The Commission sees three main priorities for economic policy this autumn. At the informal ECOFIN Council last weekend in Milan we had a very fruitful discussion on a number of key issues with Finance Ministers. Going forward will, however, require a joint commitment of the Commission, of the Member States, of you in the European Parliament and other partners on our shared objectives.

The first priority this autumn is supporting investment. Europe has a lot to offer in terms of innovation, skilled workers and entrepreneurship. In order for all of this to translate into new start-ups around Europe we need to promote investments from both public and private sources, and at both national and European levels.

We are working on comprehensive plan that addresses both sides of the coin. This must be a joint effort.

At national level, countries with large current account surpluses should commit to investing more. In addition, all countries should prioritise investments in R&D and key infrastructures within their public spending mix.

At European level, European resources (such as the EU budget, EIB) should be used in particular to leverage private investment. We need a stable and robust banking sector and well-functioning capital markets to provide accessible credit to the real economy.

The second priority is stepping up reforms that unlock growth potential. Without effectively implemented reforms we won’t have sustainable growth and job creation. It is not about choosing between supply- and demand-side measures: both are needed and are complementary. Reforms are also needed to secure the sustainability of our welfare societies and ability to protect the vulnerable.

No country is immune from the need to reform, though some have more pressing needs. We should use the existing economic governance framework more effectively to support the adoption and implementation of structural reforms.

Our fiscal rules do not prevent countries from reforming – far from it. There are many examples of countries that have adopted important reforms in parallel with a major fiscal adjustment. Nonetheless, there is scope to use our existing economic governance framework more effectively to support countries in their reform efforts.

Third, we need to continue ensuring sustainable fiscal policies for the sake of confidence and future generations.

Interest rates will surely not stay at record lows forever. Once they rise, public debt will become more costly, again crowding out more valuable public spending and undermining the market confidence we have all worked so hard to regain. The more vulnerable countries would unfortunately be the hardest hit by any new financial market instability.

Wise choices are therefore required. The pace of fiscal consolidation has slowed significantly since the peak of the sovereign debt crisis.

Now it is essential to improve the quality of public spending. When money is tight, there is little choice but to make savings: but there is always a choice as to how to make those savings.

Reducing expenditure rather than raising taxes, and cutting inefficient current expenditure rather than future-oriented investments, can ensure that consolidation is growth-friendly, fair and supportive of job creation. A more efficient and citizen-oriented public administration can especially benefit those in need of social support, but also promote job creation by enabling a better investment climate. As stated by the Eurogroup last weekend, more efforts are needed to reduce the tax burden on labour.

At the same time, we need to ask ourselves what is holding back private investment in Europe. We need to ensure the business climate, our internal market and the regulatory environment is favourable to companies investing in the future, innovating, developing new markets and creating new jobs.

This ties back to my point on reforms. There is plenty of growth potential in Europe that today is held back by rigidities and vested interests. In some Member States, starting a business means weeks of cumbersome, bureaucratic hurdles. Overly complex tax systems in some Member States have contributed to a sizeable grey economy.

Reforms are needed to deal with these obstacles. This inevitably means changes that not only require thinking outside of the box, but also stepping out of our comfort zones.

Honourable President and Members of the European Parliament,

Ladies and Gentlemen,

Europe continues to face great challenges. While there is no silver bullet, I am confident that we can find new sources for growth by working together in a spirit of mutual trust.

Major joint efforts are needed to deliver sustainable economic growth. At the end of the day, we all share the same objective. Let us not lose sight of that objective.

Thank you for your attention and I very much look forward to hearing your views.


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