Local view for "http://purl.org/linkedpolitics/eu/plenary/2010-07-06-Speech-2-358"
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"Mr President, ladies and gentlemen, economic governance constitutes a crucial challenge for the future of our Union. When, in 1993, President Delors made clear the need for a deeper coordination of economic policies, many Member States rejected this.
We faced a real risk and we successfully resisted it. Now we are filling in the gaps we have identified to pre-empt such risks for the future. I first announced to Parliament the ideas we fleshed out in the Commission communication of 12 May. Our debates since then are reflected in the Commission communication of 30 June. Now we are moving on to the operational phase, with the Commission ready to submit legislative proposals as early as September.
Before explaining the issues in detail, I would like to emphasise how much this process has benefited from the work with the European Council, the task force chaired by the President of the European Council, and indeed the deliberations of Parliament. This work has helped to build a real European momentum. I hope that this will translate later into a swift consideration and swift adoption of legislative proposals.
Our approach to economic governance is to have rules that are more comprehensive and more efficient. The current treaty gives us plenty of scope to do this and I am convinced that the Community method will once again give us the right answer.
We need a stronger surveillance regime. That means one that is stricter and broader, covering budgetary, macro-economic and structural policies, a regime that acknowledges the reality that every Member State has its own particularities but a regime that also reflects the interdependence we all know is central to the European economy.
What does this mean in detail? First, we need more coordination. Key to this is the ‘European semester’. It will enhance economic transparency and encourage peer reviews, ex ante, among Member States. If Member States submit their stability and convergence programmes and their national reform programmes simultaneously, we will have a truly joined-up approach. This European perspective will be an asset for Member States as they plan, discuss and adopt their national budgets according to their national constitutional procedures.
Second, we need the credibility that comes with better enforcement. This means a refined incentives and sanctions toolbox, a more effective mix of both preventive and corrective action. We need a Stability and Growth Pact that is targeted, not only regarding the deficit criterion but also on debt: a pact that has real teeth and is respected. Of course, the most effective sanctions are those that do not need to be used because they create the incentive to comply – but, in order to achieve this, the rules need to be strong enough to command this respect.
I want to be very clear on this. Without a more stringent system of incentives and sanctions, we will not reinforce economic governance in a credible way. If a Member State does not respect the commonly agreed rules, then it must be prepared to suffer the consequences. This means also that sanctions must be designed so as to apply to all Member States on an equal basis. Parliament can be reassured that the Commission will do its utmost to ensure that this will be the case.
As regards financial sanctions, we proposed to base them on a broader range of expenditure from the EU budget than before. In a nutshell, all Member States should, in future, face the risk of losing money from the EU budget in the event of persistent failure to comply with the fiscal rules. The application of these rules should also be quasi-automatic as regards the corrective arm of the Stability and Growth Pact.
The timing of measures is also key. We must not fall into the trap of waiting too long before sanctions kick in. Incentives and sanctions must be brought upstream so that action is deployed before the situation gets out of hand. Preventive action can be much more effective than corrective action – but it requires discipline and political will.
One of the weakest points of our current rules is the absence of mechanisms to deal with problems appearing in so-called ‘good times’. We are addressing this in our proposals, in particular, as regards the euro area.
Furthermore, when the first Commission – which I had the honour of presiding over – brought up this question in its report on the tenth anniversary of economic and monetary union, in 2008, not many people listened. I nevertheless emphasised the need to provide an adequate response to the question of economic governance in my guidelines for the present term, which we discussed together about a year ago.
Third, our surveillance needs to capture all the key elements. It must not be restricted to fiscal policy alone. We have seen that such a narrow perspective does not work. We must have tools to detect macro-economic imbalances among Member States.
Such imbalances weaken the cohesion of the EU and, in particular, of the euro area. A comprehensive scoreboard of indicators will give us what we need to identify increasing divergences and to propose remedies. They need, of course, to be complemented by appropriate enforcement mechanisms for such remedies.
Fourth, as well as stricter fiscal rules, we also need to push the structural reforms, innovation and trade that will put Europe back on track in terms of growth and create jobs for the future. That is what our Europe 2020 strategy is all about. The European Council endorsed it a fortnight ago. Now we need to put it into practice to ensure that national and European policies are fully in tune, creating the virtuous cycle where growth in one part of Europe helps drive growth in another.
Fifth, let me repeat the utmost importance of transparent and robust financial market regulation, and call on all actors in the process to adopt the necessary reforms as quickly as possible.
I would like to underline the historic dimension of the reforms we are putting forward. They constitute an answer to the challenges that our single currency is facing in Europe, but they also have an important impact in the global financial markets.
The time has come to give the Economic and Monetary Union the tools it needs to fully function, in order to ensure its credibility. What is at stake is not just some technical rules. What is at stake is the future of the euro and we can say, to some extent, it is the future of our European project.
To make all this possible, we have to show without any possible doubts that the world has changed and that our proposals on economic governance are not more of the same, but the real breakthrough. Today, the conditions have been met to bring together the Stability and Growth Pact, economic governance and the structural reforms in a consistent system within the Economic and Monetary Union.
This system should harness all our tools for the common objective: the Structural Funds, budget surveillance and the reforms provided for in the Europe 2020 strategy.
This is a strategy for the whole Union. This is not just an addition of different strategies. It is a real economic strategy for Europe, but we can only have a European economic strategy if we have a truly economic system of governance. However, the system of incentives and sanctions should reflect the special responsibilities of Member States that have already adopted the single currency, in strict compliance with the legal framework. Those Member States share a common good called the euro and it would not be acceptable for the misbehaviour of some members to put all the others at risk.
I am convinced that these proposals will mean a step change in the economic consistency of the Union, while at the same time preserving the inevitable specificities between those Member States who are members of the euro area and, of course, respecting those who are not yet.
Commissioner Olli Rehn then discussed this with you during his hearing. By that time, the Commission had already announced its intention to put forward proposals to strengthen economic governance in the European Union, particularly in the euro area. Unfortunately, the crisis has shown that we were right. However, the urgency of this debate is now recognised, and I can only welcome the fact that the conditions have finally come together for advancing towards a true European economic governance.
The current situation requires ambition and boldness: the proposals of the Commission will send out a strong message, both inside the EU and worldwide, that the European Union is equal to the task. It is therefore paramount that our three institutions work consistently and in a spirit of close cooperation to finalise and approve these proposals with mutual confidence and belief in our common future.
It is important that all our partners worldwide understand that we are ready to do whatever it takes to defend the euro and the stability of our common currency. The Commission’s task is to use its right of initiative to further the common interest of Europe and its citizens. It is determined to fulfil this task and is convinced that these proposals are the right way forward for Europe.
As a result, the Commission provided detailed proposals on 12 May. These proposals have kept the debate alive, including with the European Parliament, and particularly the work of the task force presided over by the President of the European Council. The Commission is pleased with the progress of this work and with the consensus achieved up to now, which was shown very clearly during the European Council.
In order to maintain this dynamic, last Wednesday, the Commission again adopted a range of proposals which, once converted into legislative initiatives, will be able to be implemented from 2011 if they are adopted in good time. These proposals do not involve changing the treaty. We must act now, within the legal context that we have today. This is not a limitation. The new possibilities that the Treaty of Lisbon offers us can and must be fully utilised, because we no longer have the time to wait. Our citizens, our businesses and our economy are demanding that we take initiatives. It is our responsibility to decide and to act now.
Because of the economic crisis, the European Union has been faced with a series of serious tests. The reinforcement of economic governance is, of course, just one aspect of the European Union response to the crisis.
The response has also included other dimensions: the comprehensive reform of the regulation of financial markets and proposals for a new European supervisory architecture. As I said this morning, a deal is within reach in the coming days. I call on all parties to maintain the positive dynamic, to ensure that new authorities can start their work in early 2011. This will also keep Europe in the lead in implementing our G20 commitments in this area: the measures to secure financial stability, first through the Greece Programme and then through the mechanisms for the euro area as a whole and, last but not least, a programme for growth and jobs through structural reforms included in the Europe 2020 strategy.
Our response to the crisis is a holistic one. We stabilise, we consolidate and we modernise. We prepare our social market economy to ensure a better future for our citizens. But for now, let me focus on governance.
The challenge of the past few months has centred on whether our economic governance is equal to the new pressures placed on our economic and fiscal stability. We have the treaty provisions in place which allow us to act. We have the institutions. We need to make it work."@en1
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