14 November 2013

Remarks by Jeroen Dijsselbloem & VP Rehn following the meeting of the Eurogroup

The Eurogroup discussed and decided on two exits, on Ireland and on Spain. It also reviewed the programme countries, the Banking Union, public backstops and the economic situation, including the Commission's autumn forecast, Annual Growth Survey and Alert Mechanism Report.

Eurogroup/Dijsselbloem

We first discussed the two countries that are about to exit their adjustment programmes, Ireland and Spain. I would like to congratulate both countries at this important moment for the euro area. Both countries have always shown strong commitment towards the implementation of their programmes. This has shown results, as the recent developments on the financial markets have shown. The Irish and Spanish people have gone through a difficult period but I am now confident that their efforts will pay off in the coming years. Now these economies are back on the road to recovery.

On Ireland, a statement has been distributed to you (view). Let me just highlight the main points: starting by saying that we fully support Ireland's decision to request a clean exit from the programme. The programme implementation has been successful, as evidenced by the return of market confidence, the ongoing economic recovery and declining unemployment. We have full confidence in the ability of the Irish government to maintain the reform momentum in order to address the remaining challenges in the fiscal, banking and structural areas. The final review will unlock a last disbursement of €800 million.

There is a statement has also been distributed on Spain (view) and our message is very similar to the one for Ireland. We fully support Spain's decision to cleanly exit the programme. Thanks to the programme, the Spanish banks are now stronger and more resilient and supervision and regulation have been tightened. And this is confirmed by the positive market sentiment and the encouraging recent economic data from Spain. The structural reform agenda has advanced in parallel, allowing a return to growth and a decrease in the macro-economic imbalances. The Spanish authorities are determined to keep the reform momentum as I noticed when I visited Madrid two weeks ago.

A few remarks on other programme countries which we discussed today. On Cyprus, we took stock of the main results of the second review mission to Nicosia that ended last week. Overall, the programme seems well on track and all fiscal targets were met with comfortable margins. In addition, we were glad to hear that significant progress has been made towards recapitalisation and restructuring of the financial sector of Cyprus.

Finally, some words on Greece. The Greek authorities need urgently to deliver on four main areas: (1) the milestones agreed at the previous review, (2) the measures to close the fiscal gap in 2014 and 2015, (3) the structural reforms and (4) the improvement of the governance of the privatisation process. We need progress on these four outstanding areas in order to be able to conclude the review and the troika to conclude the review. We are aware of the efforts already undertaken by Greece, but the job is not yet done. In order to return to a path of sustainable growth and job creation, the programme needs to be further implemented.

We also talked about the Banking Union today in the EG. Shortly discussed the state of play as we will regularly do in the coming months. Of course, the main debates of the Banking Union and the legislation will be done in the ECOFIN.

We focused our discussion on the issue of the public backstops in view of next year's stress tests. We are working on a statement that will provide clarity to all participants on the order of the backstops. The elements are, of course, well known. Private solutions must be explored first. Then, only if no private solutions can be found, public money could be engaged at national level in line with State aid rules. If a Member State could not afford to contribute, then the ESM could come into play. We will continue that debate and discussions in ECOFIN tomorrow.

On the economic situation, we discussed the Commission's autumn forecast released last week as well as the Annual Growth Survey and Alert Mechanism Report that were published yesterday. Let me just say that the economic outlook for the euro area seems to become more positive, however important challenges remain, such as high levels of public and private debt and record high levels of unemployment. Therefore, there is no reason to be complacent.

Finally, next week we will have an extra dedicated EG meeting, which will be an important milestone for fiscal surveillance in the euro area, as this will be the first time that we will discuss draft budgetary plans, on basis of the Commission's assessment of all euro area Member States. This will show that we are following on our commitment to strengthen fiscal policy coordination.

Full statement

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VP Rehn

The economic situation has not changed dramatically since yesterday, or last week. Yesterday, we presented the Annual Growth Survey, and last week the Autumn Economic Forecast. Nevertheless, today we received the Eurostat flash estimate for GDP for the third quarter of 2013. The flash estimate shows a continuing modest recovery in Europe. To be more precise, in the third quarter of this year, GDP expanded by 0.1 per cent quarter-on-quarter in the euro area and by 0.2 per cent in the EU as a whole. In the previous quarter, GDP had increased by 0.3 per cent in both euro area and the EU as a whole.

Compared to the Autumn Forecast of the Commission, the quarterly growth figures for the euro area and EU, in both cases, are 0.1 percentage points lower than projected in our Autumn Forecast and also lower than market expectations, which were in line with our forecast. Nonetheless, more modest growth was actually expected in the third quarter since the previous quarter's growth figure had, to some extent, resulted from temporary factors in the first and second quarter. The flash estimate showed that there was significantly higher-than-expected growth in our autumn forecast in Latvia: +1.2 per cent instead of 0.2 per cent. For Bulgaria: 0.6 per cent instead of 0.2 per cent. Spain and Estonia resumed growth in the third quarter. In the Netherlands, after flat GDP growth in the second quarter, GDP increased by 0.1 per cent. Growth in Portugal remained in positive territory, confirming the country's exit from recession in the second quarter.

I want to congratulate both Ireland and Spain, the Irish and the Spanish people, for the decisions of today. Ireland's decision to exit the programme without a precautionary credit facility is very important. I know the Irish Government reflected very carefully on this matter. The Commission has always made very clear that this was a decision for Ireland to take and that we would support Ireland, whatever it decided...

The programme for Spain has been successful. The banking sector is much more stable than it was in July 2012, when the programme was launched. It is now essential that the Spanish authorities remain fully committed to continuing and completing the financial-sector repair so as to strengthen the nascent recovery and pave the way for a sustainable improvement in employment.

In short, today has been a good day for both Ireland and Spain. It has been a good day for Europe as well, because it provides clear evidence that the rebalancing of the European economy is indeed progressing.

Europe has supported the Irish and Spanish people in their efforts to emerge from profound crises caused by irresponsible financial practises and insufficiently effective governance, at either national or European level. The shadows cast by those crises still linger unfortunately, as we are painfully aware, which is why it is essential to stay the course of reform at this juncture. Nonetheless, the rules we have put in place since 2010 mean we are in a far better position to ensure that such past mistakes are not repeated in the future.

Full statement

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