Local view for "http://purl.org/linkedpolitics/eu/plenary/2011-10-27-Speech-4-055-000"
| Predicate | Value (sorted: default) |
|---|---|
| rdf:type | |
| dcterms:Date | |
| dcterms:Is Part Of | |
| lpv:document identification number |
"en.20111027.6.4-055-000"2
|
| lpv:hasSubsequent | |
| lpv:speaker | |
| lpv:translated text |
"Mr President, dear colleagues, good morning, as I said to the journalist only a few hours ago.
I have worked hard with all the European Council members – and in particular the President of the European Commission – to achieve this result. Together, the five elements constitute a comprehensive package and are all interrelated. For instance, the banking problems and the sovereign debt tensions were feeding each other; and we should consider the fact that achieving growth is the best way to reduce public debt. Everything is in everything and vice versa.
Let me take one step back. I should like to underline that the decisions taken by the four summit meetings since Sunday are part of a process which has lasted for more than a year. All along we had a double duty: dealing with the current crisis and preventing a new one from arising; taking emergency actions, like setting up rescue funds, while also putting together, step-by-step, a new economic governance to help avoid future problems.
You too have participated in that process, for instance through the legislation on the supervision of the financial sector and, more recently, the ‘six pack’ on economic governance. Your debates and the work of your committees have also furnished many of the ideas that have shaped this process and, in some cases, decisively improved the outcome.
Why the acceleration over these past months? Before the summer, monetary union was also in a difficult situation. That is why I convened a Euro Summit on 21 July, which decided on a significant package to reduce the debt burden for Greece and to stop the risk of contagion, thanks to more flexible use of the EFSF rescue fund. The immediate political reaction to the July package was positive. However, during the summer, some doubts crept in about the package’s implementation. Although these proved unfounded in the end – all 17 parliaments duly approved it within three months – the harm was done. Market volatility began to grow, and this during the very days when brinkmanship in the US Congress about their potential default was adding to the flames. Market speculation can sometimes become a self-fulfilling prophecy.
On top of this, we have had to work since July in a different economic climate. Global economic growth is slowing dramatically, not only in Europe but also in the United States and some emerging countries. It became necessary to take further measures, both for Greece and to stop contagion, as well as to address weaknesses in the banking system.
I should also like to underline that stimulating growth is an essential part of the package. Sunday’s European Council discussed this extensively and adopted measures to stimulate growth and create jobs. Beyond the immediate crisis, we have all along kept sight of the broader picture. In the end only sustained economic growth can bring back confidence, create jobs and absorb deficits.
Let me come to some remarks of a general and institutional nature regarding all the economic measures. First of all, the European Union is putting in place a multi-faceted reform of economic governance. People who only focus on one or other aspect, and rush to denounce them as insufficient, miss the overall picture and the interactions between the various elements. It is the overall combination of institutional pressure, peer pressure and market pressure that will help us to avoid getting into such difficulties again.
All three forms of pressure have been enhanced: institutional pressure above all, thanks to the financial sector supervision and the six-pack legislation strengthening fiscal and macro-economic surveillance. I am very happy about this achievement and your improvements to it. We took a further step last night in agreeing that, for euro area Member States in an excessive deficit procedure, the Commission and the Council will be able to examine national budgets and adopt an opinion on them before their adoption by the relevant national parliament.
Peer pressure has also become more effective, not just because of the new instruments, such as the European Semester, but also as a result of events. Today, no government can afford to underestimate the possible impact of public debts or bubbles in another eurozone country on its own economy; they would be punished by the voters. If one compares this situation with that of ten years ago, the pressure which leaders put on each other has become much more intense, as we have seen in recent days.
Thirdly, market pressure has also increased. Markets will never again treat all sovereign debt in the eurozone as equal. They were asleep in the euro’s first decade and, even if they are currently overreacting, the markets will not go back to sleep again.
All the Union’s institutions and governments have been expending significant political capital on dealing with the debt crisis. From a series of national debt crises, the situation was evolving into a systemic concern, threatening the stability of the eurozone as whole, and this threat had to be contained. This is what we have done.
Let me stress that these three types of pressure to induce responsible behaviour reinforce each other. In fact, there is already a powerful interplay at work. To be even more explicit (knowing some of your fears), political pressure within the European Council or the Council does not undo the institutional or market pressure; no, it strengthens their impact. The President of the Commission and I both have this experience. We all work in the same direction: sound budgets, lower debts, sustainable growth. That is the result the citizens expect.
My second institutional remark concerns the eurozone summits. Some have expressed the fear that these will lead to divisions between Member States. My reasoning is simple. It is perfectly natural that those who share a common currency take some decisions together. In fact, one of the origins of the current crisis is that almost everybody had underestimated the extent to which the economies of the eurozone are linked, and we are now remedying that. Moreover, monetary policy is at the heart of economic policy, and the 17 have a common monetary policy. Yet we need a policy mix. Monetary policy alone is not enough to deal with the situation. We cannot have a common currency and a common monetary policy and leave everything else to the states involved. That is why the 17 will have to go further.
Let me be clear: the eurozone is not a derogation from the European Union, it is part of it. The Treaty is quite clear: it is the Member States which have not joined the euro which are referred to as ‘Member States with a derogation’. And, of course, most of them will in due course join the euro.
However, it is vitally important to safeguard the integrity of the single market among the 27. It gives the Union cohesion and is the very basis of our prosperity. So we must keep the two configurations as close as possible, in a spirit of trust.
I will personally do my utmost to avoid divisions between the 17 and the 27. Not only is it my intention to organise Euro Summits, if possible, immediately following a European Council meeting, but it is also the case that the Commission and Parliament will continue to play their roles.
A third and final institutional remark: the Euro Summit decided to reflect on a further strengthening of economic convergence within the euro area and on improving fiscal discipline and deepening economic union, including exploring the possibility, should this prove necessary, of limited treaty changes. The full European Council will revert to this issue in December on the basis of a report by myself, in close collaboration with Presidents Barroso and Juncker. Of course, any proposal for a treaty revision would also be a matter for your Parliament to consider, as indeed are other possible measures.
My intention is that we discuss first the ‘what’ before we discuss the ‘how’. First we should examine the goals and only afterwards the legal instruments required to get there. Treaty changes are difficult. Improvements are possible, and it can be useful to give the public and the markets a sense of our medium-term direction. But a treaty change is not the right way to deal with an immediate financial crisis. So we have to get the different time perspectives right.
This brings me to my concluding remark, on our use of time. The European Union is often charged with coming up with too little too late. The markets have the luxury of moving at the speed of a click of a mouse. Political processes, even if they are working at their most rapid, cannot deliver so speedily. Approval of the July package by the 17 national parliaments in two-and-a-half months is impressive by political standards, even if it is slow by market standards.
As a Parliament yourself, having been in a position to use several months to bring the six-pack negotiations to a favourable conclusion, you will appreciate the importance of sound parliamentary scrutiny and negotiation. Moreover, at some point the request to always be faster is just not credible. In politics one needs time to bring everybody on board and tie diverse interests together in a solid package. Time is the politician’s cement.
Yet it is crucial that we put in place rules and procedures that will anticipate problems in the future and prevent them from arising. And it is also crucial that we develop emergency procedures enabling a more speedy and flexible reaction. Improving Europe’s capacity to act is the best sign of mutual trust we can give to the public, the markets and ourselves.
Last night was a crucial political step which still requires, as after any such meeting, technical and legal follow-up. Sometimes I hear complaints that markets do not give democracies the time we need to get things approved. There is some truth in this. But I am deeply convinced the markets will give us the time we need when they see a clear direction and a clear determination.
We therefore took – yesterday and on Sunday – important decisions on the five fronts where action is needed. The first front: a sustainable solution for the Greek debt. We want to put Greece on track so that, by 2020, it will have reduced its public debt to 120% of GDP. Since July, market conditions have worsened. The new programme includes an extra effort by the official sector. A new EU IMF programme of up to 100 billion will be put in place by the end of the year. It also includes a voluntary contribution by private creditors who had lent to Greece. It was agreed by them last night and amounts to a nominal discount of 50% of the Greek national debt.
The second front: a sufficient firewall against contagion, thanks to an agreement to multiply up to five-fold the firepower of the European Financial Stability Facility rescue fund. The leverage could be around one trillion euros, under certain assumptions about market conditions, the set-up and investors’ responsiveness in view of economic policies.
We have identified two approaches for the EFSF. The first one aims at giving credit enhancement to sovereign bonds issued by Member States. Under the second approach, the Fund could set up one or several special purpose vehicles to finance its operations. Each option could lead to leverage of up to four or five times. They can be used simultaneously, so as to increase the robustness of the financing strategy.
The third front: we foster confidence in the European banking sector. We approved a coordinated scheme to recapitalise banks across Europe. The ratio of highest quality capital will be increased to 9%. This will enable the banks to withstand shocks, which is important in the current exceptional circumstances. State guarantees to improve the longer-term funding will safeguard the flow of credit to the real economy. This is essential for the prospects for growth.
The fourth front: further fiscal consolidation by those Member States which need more sustainable public finances and more structural reforms. In this context, the Euro Summit welcomes the clear commitment of Italy to achieve these objectives and to abide by the timetable it set itself. This ambitious package – in particular the measures to increase competiveness and to liberalise the economy – now needs implementation. We also commend Italy’s commitment to achieve a balanced budget by 2013, and we take note of the plan to increase the retirement age to 67 years by 2026. The way to achieve this should be defined by the end of this year.
Finally, there is a raft of measures taken at Union level to stimulate growth, about which I will say more later."@en1
|
| lpv:unclassifiedMetadata | |
| lpv:videoURI |
Named graphs describing this resource:
The resource appears as object in 2 triples