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Europe must move beyond the crisis. How to do this is set out in today's Commission package. Since each of our Member States is in a different situation it is only natural that sometimes they see solutions differently. But the European Commission has the obligation to look at Europe as a whole. What it does, and it is unique in that sense, is to offer a comprehensive response that is both tailored to individual Member States and good for the European economy as a whole. Europe needs a consensus on the policies that are both right for us as a Union, and right for each Member State.
Key points
In the short term, recovery is hampered by the high levels of debt, both public and private debt, that have accumulated in many Member States, and because the repair of the banking sector is slow to bear fruit. Moreover, the size and urgency of the imbalances built up over several years have led to significant adjustments, which now have to be carried out simultaneously across Europe with a strong interdependence between the European Union economies. Since the current crisis is structural as well as cyclical, the pace of reforms needs to be stepped up across the European Union to secure recovery and ensure the rebalancing of the economy. "Deficit" countries need to boost their competitiveness and "surplus" countries need to remove the structural obstacles to the growth of their domestic demand.
The Commission's analysis of national reform programmes clearly shows that Member States could do more to help themselves get back to growth and move Europe beyond the crisis. So, in today's recommendations, we urge Member States to continue and step up their efforts. Indeed, there is no room for complacency. Many of our recommendations directly seek to boost competitiveness and make our economies more dynamic...
Completing the architecture of the Economic and Monetary Union, the EMU, particularly the Banking Union, will be essential for underpinning future sustainable growth and preventing the re-emergence of imbalances. And we need to make sure banks continue to tidy up their balance sheets.
We also need to provide companies with alternatives to bank loans – for example, private equity, risk-sharing instruments with the European Investment Bank or grants from the European Commission. On some of these aspects we are working actively not only with the involvement of the European Central Bank but also directly with the European Investment Bank. You will find these priorities in terms of the funding, lending, to the economies, reflected in our recommendations to 10 Member States. And I am now speaking about the recommendations for the countries that are not in a programme, because as you know for them there is a special document...
While fiscal consolidation is ongoing and should continue with a pace that reflects the situation in each country, Member States should now intensify their efforts on structural reforms for competitiveness. The social emergency in many parts of Europe and the increasing level of inequalities in some regions add to the pressing need for reforms. But because many of these structural measures take time before delivering concrete results in terms of employment creation, specific focused action is needed to deliver short-term results for the unemployed, and especially young people. In parallel, all systemic efforts to reinforce Europe's economic governance, especially the Banking Union, should continue with determination. It will not be acceptable, a relaxation of efforts in that matter.
This is the European consensus I am calling everyone to rally around now! We have to overcome the ideas of policies coming just from one or the other capital. We need a European consensus. And this consensus is vital for confidence and confidence is key for growth. So this is the European consensus that I will propose to the European Council in June. This is the plea I will take to the European Council – backed up by the in-depth analysis done by the Commission, an exercise that - I want to underline as well - was done in closer partnership with the Member States.
To be successful a crisis strategy has to be properly designed and to have the necessary political and social support. That is particularly true in countries such as Greece, Ireland, Portugal, which are undertaking impressive reforms. And Cyprus, that has now also embarked on similar efforts. But it is indeed important for all our Member States.
It is in the interests of Member States to implement these recommendations and agree on the basic lines for Europe's future. We should avoid giving counterproductive signals that can only undermine confidence.
The debate about austerity versus growth has been to a large extent futile and even counterproductive. Instead of fuelling these debates that are divisive and can only undermine confidence, our capitals should focus on promoting the European consensus which the Commission is putting forward, with more determined and urgent action on growth-enhancing reforms. And, at the same time, more focused action to address unemployment, especially youth unemployment.
The crisis has left us with the strong conviction that we need to reform, and to reform now. The cost of inaction will be very high. The benefit of taking action now is that Europe will emerge stronger from this crisis. And I really believe that if we implement these programmes Europe will become much more competitive, much more resilient, much stronger than before the crisis.