New cycle in economic governance

The European semester will co-ordinate ex-ante the budgets of the Member States

Photo: Pho­to: © Euro­pe­an Union From left to right: Olli Rehn, Jose Man­u­el Bar­ro­so and Las­zlo Andor dur­ing the news con­fer­ence.

At a joint press con­fer­ence in Brus­sels on Wednes­day Euro­pe­an Com­mis­sion Pres­i­dent Jose Man­u­el Bar­ro­so and com­mis­sion­ers Oli Rehn and Las­zlo Andor pre­sent­ed the pre­pared by the Euro­pe­an Com­mis­sion Annu­al study of eco­nom­ic growth. In essence, this is a pro­gram­ming doc­u­ment for over­com­ing the cri­sis and accel­er­at­ing eco­nom­ic growth.

At a joint press con­fer­ence in Brus­sels on Wednes­day Euro­pe­an Com­mis­sion Pres­i­dent Jose Man­u­el Bar­ro­so  and com­mis­sion­ers Oli Rehn and Las­zlo Andor pre­sent­ed the pre­pared by the Euro­pe­an Com­mis­sion Annu­al study of eco­nom­ic growth. In essence, this is a pro­gram­ming doc­u­ment for over­com­ing the cri­sis and accel­er­at­ing eco­nom­ic growth. It con­tains a set of 10 tasks which Europe is to tack­le in 2011.

The Annu­al Study of Eco­nom­ic Growth sets a new stage in Euro­pe­an inte­gra­tion, Bar­ro­so point­ed out in front of jour­nal­ists. We have under­tak­en the task to study new oppor­tu­ni­ties and sig­nif­i­cant­ly improve the way we man­age and co-ordi­nate the mutu­al­ly depend­ent econ­o­mies with­in the Euro­pe­an Union. Such is the EU mod­el. Such is our eco­nom­ic gov­ern­ance in action. The annu­al study is a con­sist­ent and com­pre­hen­sive plan for growth and high­er employ­ment in Europe. I am sure that if it is applied in its entire­ty, Europe will again expe­ri­ence strong eco­nom­ic growth and  high­er employ­ment, he said.

The first 'Eu­ro­pe­an Semes­ter' has also start­ed as an express­ly new mod­el of form­ing the econ­o­mies and the budg­et  pol­i­cies of the gov­ern­ments of the Mem­ber States. In Bar­ro­so's words, it will shed light upon the actions of each gov­ern­ment.

The new cycle in the eco­nom­ic gov­ern­ance in the EU brings togeth­er dif­fer­ent meas­ures that are impor­tant for the more sta­ble res­to­ra­tion aft­er the cri­sis in the long run. The tar­get is the EU to retain its com­pat­i­bil­i­ty and to pre­pare itself in achiev­ing the tasks includ­ed in the 'Eu­rope 202' strat­e­gy.

Empha­sis is laid on effect­ing a strict budg­et con­sol­i­da­tion, cor­rect­ing the micro-eco­nom­ic   gaps and secur­ing sta­bil­i­ty to the finan­cial sec­tor. Strong empha­sis is also laid on updat­ing of the labor mar­kets, estab­lish­ing jobs and reform­ing the pen­sion sys­tems. Growth strength­en­ing will rely on the poten­tial of the sin­gle mar­ket, pri­vate cap­i­tals will be attract­ed to fund devel­op­ing indus­tries of the future such as 'green' ener­gy and inno­va­tive start­ing com­pa­nies. Sup­port is giv­en to increas­ing the invest­ments in large  infra­struc­tur­al pro­jects through draft Euro bonds, for exam­ple.

For the first time the EU and the euro zone will in advance co-ordi­nate their budg­et and eco­nom­ic pol­i­cies.

The Mem­ber States and the Com­mis­sion will joint­ly and com­pre­hen­sive­ly dis­cuss macro­e­co­nom­ic sta­bil­i­ty, struc­tur­al reforms and growth boost­ing meas­ures. The dia­logue will also con­tin­ue through­out the spring meet­ing of the Union in March.

It is pro­vi­sioned the mem­ber States to present their pro­grams on sta­bil­i­ty and con­ver­gence and their nation­al pro­grams of the reforms in mid-April in order the Com­mis­sion to be able to attest them simul­ta­ne­ous­ly. The rec­om­men­da­tions of the Com­mis­sion will be enclosed in the pol­i­cies and in the nation­al budg­ets of the 27 coun­tries sub­ject to Union approv­al. In this way, in June and July there will be spe­cif­ic rec­om­men­da­tions for each coun­try to make it pos­si­ble for them to final­ize their 2012 budg­ets.  

Accord­ing to Oli Rehn, the key mes­sage of the Annu­al Study of Eco­nom­ic Growth is that Europe needs both fis­cal con­sol­i­da­tion and struc­tur­al reforms to cre­ate pre­req­ui­sites for sus­tain­a­ble eco­nom­ic growth and open­ing new jobs. Con­sol­i­da­tion and growth go hand in hand in present day Europe, said he.

Among the pri­or­i­ties in the area of Com­mis­sion­er Las­zlo Andor with­in the con­text of the new eco­nom­ic gov­ern­ance are imple­men­ta­tion of employ­ment favor­ing tax­a­tion, leg­is­la­tive pro­tec­tion for work­ers under tem­po­rary con­tracts, oppor­tu­ni­ties for sec­ond source of income for the work force. He placed par­tic­u­lar accent upon the require­ment for high qual­i­ty train­ing, sup­port for job seek­ers or in case of self employ­ment, increas­ing the par­tic­i­pa­tion of eld­er­ly work­ers on the labor mar­ket and rais­ing retire­ment age.

In par­al­lel with the instru­ments imple­ment­ed to strength­en eco­nom­ic gov­ern­ance in the EU, the Com­mis­sion also thinks of increas­ing the amount of the tem­po­rary finan­cial sta­bil­i­ty fund for. With­out men­tion­ing the raised amount of the fund, Pres­i­dent Bar­ro­so point­ed out it should be expand­ed to guar­an­tee the effi­cient capac­i­ty of this mech­a­nism. As of Jan­u­ary, bet­ter finan­cial reg­u­la­tion will be effect­ed also by the new Euro­pe­an super­vi­so­ry bod­ies for the banks, insur­ance and secu­ri­ties and mar­kets, as well as the Euro­pe­an Coun­cil for Sys­tem­ic Risk.

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