The failure to predict and head off the crisis was a collective failure of economists, banks, regulators, supervisors and politicians.
In the European Economic Association Congress in Barcelona, Mr Barroso highlighted the following issues regarding the current crisis:
· It was a collective failure not to predict the crisis at the right moment
· The EU response to the crisis has been very significant. Since October 2008 the Commission has approved a total of EUR 3.6 trillion – equivalent to 30.5% of GDP - of State Aid measures to financial institutions
· The Commission's latest estimates show that, while EU GDP continued to decrease in the second quarter of this year, the pace of contraction slowed
· The recent recovery spots are fragile and do not allow for any complacency
· It is too early to withdraw support for the economy and the financial sector; however, exit strategies are one of the key issues in the EU agenda
Regarding the measures taking in the financial sector, he stated that:
· The first priority is to get bank credit flowing again. In order to lend banks must be in a sound position. The Commission will therefore continue to encourage stress testing for the systemically important banks
· The second priority is to make sure that those banks receiving assistance will be viable once public support is withdrawn. Bank restructuring must be carried out in a way that ensures financial stability while maintaining a level playing field
Finally, he concluded by saying that: “Europe has been strengthened by the crisis. It has taught us just how interdependent our economies are at European and global level. We now know that, to safeguard our prosperity, we must co-ordinate our policies better and earlier in future. We have emerged with a renewed sense of purpose. I believe that we will now go from strength to strength and that, with resolve and imagination, Europe will be a leading player in the 21st century economy.”
© European Commission
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