The EU and the economic crisis - the next steps to recovery

11 January 2013

“Let’s make 2013 a less turbulent and more boring year than 2012,” said Olli Rehn, European Commission Vice-President for Economic and Monetary Affairs and the Euro.

Harking back to where things stood one year ago, Rehn recalled “there was profound uncertainty over Greece. There was serious concern over Italy and Spain. The effects of the ECB’s [European Central Bank] liquidity operations were yet to be fully felt in the real economy. And countless doomsday prophets were predicting the break-up of the euro zone”.

“But 2012 was not the year the euro zone broke up. It was a year in which the euro zone proved its political resilience, a year in which we took the necessary bold decisions to ensure the unity and the sustainability of the euro. Today, those still predicting the breakup of the euro zone are behind the curve,” the commissioner said.

He said that even though there were fewer grounds for pessimism at the beginning of 2013, “we cannot afford to lower our guard”. “Instead, we must now capitalise on the improved sentiment and pursue the rebalancing and reform of our economies with consistent determination,” he said.

The commissioner outlined five work streams that together formed the EU’s “comprehensive policy response”:

  • “We need to maintain the pace of economic reform to support the rebalancing of the euro zone,” Rehn argued.
  • “We must ensure that the debate on Europe’s future addresses the competitiveness of our industry, and does not focus on institutional issues alone,” he said.
  • “We need to set the wheels of the European economy in motion again by boosting productive investment, both public and private,” Rehn said.
  • “We must continue to pursue growth-friendly fiscal consolidation,” he argued.
  • “We must build a deep and genuine Economic and Monetary Union,” Rehn declared.

 “2012 was a year of crisis, but also a year of progress. In 2013, we need to beat the crisis and take that progress to a new level. That means seeing through the rebalancing and reforms of the euro zone,” Commissioner Rehn said.

It means “focusing on the competitiveness of our economy” to create “an open economy of entrepreneurs and better-trained employees and workers”: focusing on innovation and skills, and embracing the opportunities offered by expanding world trade, he argued.

He said it would also mean “finding new ways to boost productive investment and access to finance, so that our SMEs can create prosperity and boost their payrolls”.

He called for the fight against youth unemployment to be intensified, “because we cannot allow ourselves to waste a generation”.

“Our patient may be out of intensive care, but it will still take some time before she can be given a clean bill of health. That’s why any lapse into complacency would be unforgiveable. We need to stay the reform course to revitalise the European economy,” Rehn concluded.