22 January 2013

VP Rehn's remarks at the ECOFIN press conference

We have begun this year significantly more advanced in our efforts to tackle both the symptoms and causes of the crisis than we were one year ago. The bold decisions taken at both the national and European levels have meant that tail risks related to the integrity of the euro have all but disappeared. Market tensions have eased and confidence has begun to return.

But with more than 26 million Europeans unemployed and businesses still struggling to obtain the credit they need to invest and grow, it is clear that we still have a great deal of work to do to ensure that Europe can move from stabilisation to sustained recovery. Against this background, I will highlight three key priorities that were discussed today, and that will be predominant during the Irish Presidency.

First, we need to reinforce the competitiveness of European industry. Several of our Member States have seen their export shares for goods and services in the global market decline over a number of years – a trend that poses a grave threat to Europe's future prosperity. We must reverse this trend by tackling the bottlenecks for growth. That's why we need more competitive labour markets and product and services markets.

That's why we need to restore the flow of credit to households and businesses. And that's why we need to enhance public and private investment. These will be key themes of this year's Country-Specific Recommendations, which the Commission will prepare in the coming months during the Irish Presidency in the context of the European Semester.

Second, we need to support Ireland and Portugal as they move into the concluding phase of their respective programmes and prepare to return to full market financing. Today's ECOFIN reaffirmed the growing confidence in both countries' prospects for a successful return to market financing. This confidence stems from the determined implementation of the economic reform programmes that we have seen in both Ireland and Portugal.

I want to underline that a successful return to the markets for these two countries is both in the interests of themselves and, indeed, certainly in the interests of the entire European Union. In the coming months, the ECOFIN and Eurogroup will explore, together with the European Commission, how to further facilitate this successful return to market financing.

Third, we need to take forward the rebuilding of Economic and Monetary Union with urgency and determination. This means that, in the coming weeks, we should see the conclusion of negotiations on the Single Supervisory Mechanism and new capital requirements rules (CRD IV). And before the summer, as my colleague Michel Barnier confirmed this morning, the Commission intends to come forward with our proposal for a single resolution authority.

In parallel, following yesterday evening's discussion in the Eurogroup, work will continue at technical level on the modalities for direct bank recapitalisation by the European Stability Mechanism, with a view to reaching agreement as soon as possible in the first half of the year.

All of these elements will contribute to the strengthening of our economic and monetary union, and help break the vicious circle between banks and sovereign risk, in line with the commitment of the euro area summit of 29 June last year.

Finally, the two Regulations for enhanced budgetary surveillance and policy coordination for the eurozone should be adopted by the Council and Parliament without delay. They are an essential step towards further progress in rebuilding the EMU. Because we cannot build the walls of this structure until we have finished laying the concrete foundations – and that is what the adoption of the two-pack will achieve. That's why I appealed, both last week to the European Parliament, and again today to the Council, that both would now work out a solution so that we can adopt the two-pack legislation as soon as possible.

Full speech

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