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We are also promoting structural reforms for the medium and longer term, like the reforms for competitiveness, but also addressing the issue of internal imbalances, especially in the eurozone.
Our key concern, as in most parts of the world, is growth; naturally! But the question is where does growth comes from. And, of course, the responses are not the same in different parts of the world. But, at least in Europe, it is quite clear that for growth to come back to important levels and to restore confidence we need fiscal consolidation, structural reforms and targeted investment.
Indeed, at the heart of our response has been a twin track approach of stability and growth. That means restoring sustainability to our public finances – because the crisis has shown that debt-fuelled growth is unsustainable. And it means creating also the conditions for growth and jobs, through structural reform and targeted investment.
Firstly, there must be no let-up in our focus on stability. We need to stay the course, without being blind to an evolving economic situation. Fortunately, the European rulebook allows for adaptability while remaining firmly focused on sustainability and ensuring sound public finances.
Reducing debt and deficits is essential to build confidence and cut borrowing costs. Every euro spent on interest payments is a euro less for jobs and investment. In terms of firewalls, our permanent defence mechanism – the European Stability Mechanism – has alone, a firepower of €500 billion (some $650 billion), based on paid-in capital of €80 billion, higher than other international financial institution.
Secondly, to regain competitiveness there must be acceleration in structural reforms. There is work to do at both national and EU level. At the level of the European Union we are working very actively to deepen the Single Market, the largest market in the world by value.
Thirdly, to accompany stability measures and structural reforms, and since the key is growth, sustainable growth, we need to step up investment. We will move forward with project bonds. These will attract funding of up to €4.6 billion over the next two years for key infrastructure projects in transport, in energy and in the digital area. We have also proposed boosting the paid in capital of the European investment bank by at least €10 billion which would make available much-needed funding in support of job creation. This could make possible around €180 billion in increased investment, which is equivalent to 1.5 per cent of EU GDP.