05 February 2013

VP Rehn: Remarks on the Annual Growth Survey

First of all, the Annual Growth Survey puts a very strong emphasis on growth and competitiveness. We must indeed be concerned about the industrial base of Europe. In one decade between 2000 and 2011, no less than 2.5 million manufacturing jobs were lost in the four largest Member States: Germany, France, Italy and Spain.

When you add to this trend the high debt levels, the rapid population ageing and the fact that more than half of the social spending of the whole world today takes place in Europe, you get the picture of the burden that the European productive economy has to carry in order to sustain our social model – our cherished way of living.

We need to reverse this downward trend. And we can reverse it, provided we stay on the reform course. Not reform for its own sake, but reform for the sake of sustainable growth and job creation.

What should be done to drive job creation and productivity? That is the key priority of the Annual Growth Survey.

• We need to support research and innovation, as you rightly call for in your report. I truly hope that the talks on the Multiannual Financial Framework will not damage the EU's performance in innovation and research, which is our future.
• We need to support education and training, and continue reforms in our labour markets to remove obstacles to job creation.
• We need to support entrepreneurship and investment and complete the single market.
• We need to finish the job of financial repair to boost the flow of credit to SMEs and households.
• We need to support public investment, as we have done with the European Investment Bank's capital increase.
• And we need to design smart regulation that achieves societal and environmental objectives without hampering job creation and competitiveness.

All of these policies for growth will be reflected in the country-specific recommendations of this year's European Semester and I trust, also in the national reform programmes of the Member States.

Furthermore, we need to pursue consistent fiscal consolidation. Public debt in the European Union has risen from around 60 per cent of GDP before the crisis to around 90 per cent today. It is at that level that public debt becomes a drag on growth. Thus, there is no alternative to pursuing fiscal smart and consistent consolidation. Public finances in the EU are improving, and so is confidence growing. We can see the impact of the reinforced economic governance, not least thanks to the six-pack.

That's why it is essential to stay the reform course. Making real progress on our policy agenda by making an effective use of the European Semester will be a crucial test of Europe's credibility.

In this context, let me make a final point which is very much of common interest. You know well that the adoption of the two-pack is a necessary foundation for rebuilding the Economic and Monetary Union towards a genuine stability union of both responsibility and solidarity. The Commission is currently working in order to facilitate a constructive compromise on the two-pack, and I am looking forward to a positive vote on this basis in March, to further increase confidence in the decision-making capacity of Europe. We need to pass this test and together get Europe back on track for sustainable growth and job creation.

Full speech

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