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The first condition for sustainable growth in Europe is to realise what is crucial in a monetary union is the capacity for real economic adjustment, a point that many forgot during the first decade of EMU. A very high economic and social price has been paid for that omission…
The return to growth still depends very much on country-specific factors, be it public and private debt or their different social systems, and of course responsibility for many structural policies still lies at national level.
The second condition for sustainable growth is that the necessary structural change and new economic activity must be financed. And this financing is today being held back by vulnerabilities in the banking sector. Many SMEs still struggle to access finance.
That is why we must continue building the regulatory and supervisory architecture for Europe's integrated financial market, summarised in the banking union. Banks are now subject to far tougher rules than they were at the onset of the crisis. Moreover, we will soon have a single bank supervisor for the eurozone. The Commission has made a proposal to complement this with an authority to resolve failing banks, by using a common resolution fund. This is not about using public money to “bail out bankers”, because the fund will be financed by the sector itself.
The banking union will not be completed overnight. But it must be given a good start. Rigorous asset-quality reviews and stress tests scheduled for early next year are crucial to address the remaining weaknesses.
The third condition for sustainable growth is sound public finances. This includes sustainable social security and a growth-enhancing allocation of public spending in education, innovation and infrastructure.
This is not just to combat the current crisis! In the coming decade, a major drag on growth will be the decline in the working-age population. Reforms are important not only to overcome the current crisis but also to address the long-term demographic change…
We must continue reforming the European economic and social model. Not nostalgically clinging to the status quo, since that would only lead to a permanent economic decline of Europe. Not dismantling the European model, because we believe in the combination of stability culture, entrepreneurial drive and social justice. But instead, genuinely reforming and modernising the social market economy, for the sake of sustainable growth and job creation.
Taking Europe or the eurozone in isolation cannot work. Our economic reality is global. Europe must develop a common perspective, in a global context. But this cannot be an excuse for any one stakeholder to not assume his or her individual responsibility today.
Speeches by President Barroso: