16 May 2012

Barnier: Competitiveness — the key to growth in a strong Europe

Barnier stated that the European growth initiative for the short and medium term will not be enough to put Europe back on the path to lasting growth, and to enable it to cope with the competition from China, India and Brazil, which are now almost continents in their own right.

Sometimes consolidating public finances and boosting growth are viewed as opposites, and yet there is no contradiction between the two. Who can reasonably expect to produce growth through debt over the long term? And, conversely, who can expect to bring about a lasting improvement in public finances without strong and lasting growth?

The consolidation of public finances is a priority. In the space of a few months we managed to define our course and adopt common rules which we must definitely keep and apply resolutely. The new 'fiscal compact', which was patiently negotiated by 25 Member States, and the financial stability mechanism, which will become operational in July 2012, are essential steps for restoring stability and confidence. The unwavering commitment of the German government to support the Commission's proposals in this area has been essential.

The efforts that many countries are making in order to modernise their economies, for example the decisions taken by Mario Monti over recent months, and the efforts to modernise the labour market, with a move towards more flexibility in order to adapt to economic conditions, but also towards more security for workers, must be encouraged. And, as these efforts bring upheavals that can weaken standards and social structures in a period that is already fraught with difficulty, citizens must be brought on board, especially through the social dialogue. We also need to maintain basic public services which create a social bond and spread competitiveness.

In addition to financial regulation, we must do our utmost to direct savings towards the financing of productive investments. For example, on 7 December 2011 I proposed European passports for funds that invest in young, innovative SMEs and in social enterprises, and we are working on a European framework for venture capital. Another idea that could be explored is the creation throughout Europe of a European savings account for individuals with a guaranteed rate of interest, which would be used to finance loans to European SMEs.

First of all, I believe that it is vital for us to give thought to the relative competitive position of each of the European economies. What are the sectors in which each country has competitive advantages and added value? What are the promising areas in which each of them wishes to invest? These questions have to be answered from the outset.

Secondly, we must fully exploit the existing framework, especially the new economic governance tools, such as the 'European semester' of coordination, and the national reform programmes, in order to help each country to develop the sectors in which it considers itself to be competitive.

We must also make better use of the other policies, especially cohesion policy. By reducing the gaps in our competitiveness, we shall increase our social and territorial cohesion. If we count the European funding and the national co-financing, we are talking about an average of €65 billion of investment per year. In many Member States, especially those that joined the EU in 2004, that means more than half of all public investment!

Since the start of the crisis, €17 billion of this funding have been redirected towards sectors such as research and innovation, SMEs and labour market policies for the most vulnerable people. We must maintain our efforts and use the Structural Funds to consolidate comparative advantages, especially by investing in infrastructure and by training workers for the sectors that are considered to be the most promising.

Lastly, if economic governance is to be effective and is to reduce gaps in competitiveness, it must be based on the solid foundation of an effective single market. We need to deepen our internal market. Concrete proposals have been made in the "Single Market Act". On the invitation of the European Council, we are preparing new ones.

Full speech

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