Rehn: It is essential that G20 Summit in Toronto spells out guiding principles for a sequenced and differentiated fiscal exit
08 June 2010
Speaking at G20 Finance Minister’s meeting in Busan, he stressed that the EU considers that fiscal consolidation must be ambitious in terms of size and pace: it should start in 2011 at the latest, and even earlier in those countries whose fiscal space is zero or limited.
Speaking at G20 Finance Minister’s meeting in Busan, he stressed that the EU considers that fiscal consolidation must be ambitious in terms of size and pace: it should start in 2011 at the latest, and even earlier in those countries whose fiscal space is zero or limited.
He also said:
"We had very substantive and serious discussions about the challenges the world economy is facing. We all share the view that our first and foremost task is to reinforce confidence and contain the financial turbulence, so that it will not derail the nascent economic recovery.
Our G20 partners fully support the very substantial operations we in the European Union are putting in place to safeguard financial stability in Europe. We are doing so for the sake of sustainable growth and job creation, both in Europe but also in the whole world economy.
The EU has taken decisive action. On 9 May, the EU Finance Ministers decided to set up a European Financial Stabilisation Mechanism, a backstop of up to €500 billion.
In parallel, the EU agreed on a Consolidation Pact. This Pact means that the EU Member States are strongly committed to accelerate fiscal consolidation, where warranted. Fiscal consolidation should be accompanied with a comprehensive strategy of structural reform in order to raise potential growth and employment rate.
It is important in this context that the G20 Summit in Toronto will spell out guiding principles for a sequenced and differentiated fiscal exit, in the same vein as the EU is doing. All major economies need to do their part to achieve the agreed objectives of strong, balanced and sustainable growth. Coordination at global level is critical for optimizing growth prospects.
Finally, the EU fully shares the importance of driving forward the global agenda for financial reform and repair. The G20 should re-affirm its commitment to reform financial markets in a consistent and coordinated manner: this means improving both the quantity and quality of bank capital and to discourage excessive leverage; improving supervisory and crisis management processes; convergent international accounting standards; increasing transparency of derivative markets.
© European Commission
