EU Commission: Growth first then fiscal consolidation

Olli Rehn, Vice-President of the EC in charge of Economic and Monetary Affairs and the Euro, gave a press conference on the 2013 spring economic forecast. (EC Audiovisual Services, 03/05/2013).

Olli Rehn, Vice-President of the EC in charge of Economic and Monetary Affairs and the Euro, gave a press conference on the 2013 spring economic forecast. (EC Audiovisual Services, 03/05/2013).

 

The European Commission, the EU’s executive body, released yesterday its spring forecast for the economic prospects of the Union in 2013-2014. There are three issues to watch in the released text and also in what Olli Rehn, Commission Vice-President for Economic and Monetary Affairs had to say in a press conference in Brussels.

Firstly he accepted that unemployment will continue to beset the Union, because the level of economic activity is unable to offer more jobs in the foreseeable future. Rehn however didn’t miss the opportunity to note that ”At the same time, disparities across member states remain large. In Spain and Greece unemployment rates are at an unbearably high level of 27% this year, and expected to fall slightly next. At the same time, unemployment in Austria is 4.7% and in Germany 5.4% “.

This observation brought the Commissioner to his second more important remark, that France and Spain would need two more years to bring their fiscal deficits to acceptable levels. With this remarks about the EU policy mix he clearly prioritised the fight against unemployment, leaving in second place the drive for fiscal consolidation. Berlin probably will disagree with that.

What Rehn had to say about Italy was probably the third most crucial point he made about Eurozone’s short medium prospects. He stressed that “Italy reduced its deficit from 3.8% to 3.0% of GDP in 2012. For this year (2013), the deficit is forecast to stay below 3% of GDP, which facilitates exiting the Excessive Deficit Procedure (EDP)…which brings Italy close to its medium-term objective of a balanced budget”. In short Rehn acknowledges that Italy has almost delivered what the country promised to its European partners back in November 2011, when Silvio Berlusconi resigned and Mario Monti took over in Rome.

What after zeroing deficits?

Summing up what Rehn said yesterday about the medium term prospects of Eurozone and the European Union amount to an open acknowledgment that fiscal consolidation has to be subordinated to the target of growth and job creation. To this effect he noted, “In view of the protracted recession, we must do whatever it takes to overcome the unemployment crisis in Europe. The EU’s policy mix is focused on sustainable growth and job creation”.

With this observation and inasmuch as there is a real confrontation between austerity lovers and growth seekers, Rehn decisively placed himself in the last camp. On top of that EC Vice- President also said on Thursday, “Small and medium-sized enterprises (SMEs) will drive the recovery in Europe, but they need improved and easy access to finance”. The relevant article of the European Sting yesterday observed that the “the two more important institutions of the European Union, the European Commission and the European Central Bank, separately unveiled their intentions to seriously engage in an effort to create a new policy tool in support of the Union’s Small and Medium Enterprises (SMEs) and defragment Eurozone’s financial markets”.

Unquestionably what Rehn had to say during the last two days in the context of the Commission’s “Spring 2013 forecast” and in announcing the a new policy tool in support of the SMEs, place him firmly in the camp of ‘growth’ in contrast to ‘austerity lovers’.
Of course this doesn’t mean that the Commission will slacken in relation to its duties in enforcing the Excessive Deficit Procedure legislation. Seemingly however the Commission President Manuel Barroso, the Commission Vice-President Rehn and also the European Central Bank President, Mario Draghi, have started worrying seriously about the next day in Eurozone. That is after the fiscal gaps have been reduced to acceptable levels.

Countries like Greece, Italy, Ireland and Portugal have already managed or are about to zero their fiscal deficits, without seeing any tangible prospects for growth. If they are left to their fate they will prove unable to break the vicious cycle of austerity and recession, and soon will appear incapable of maintaining their government budgets in balance. The expensive euro and the fact that all south Eurozone is left out from the core financial markets, will condemn those countries to permanent misery and socio-political disintegration. A lot of people start to share this view and believe in this analysis after three years of crisis.

Given all that, the Commission and the European Central Bank are about to undertake ground breaking initiatives in order to set Eurozone’s economy back in motion. The European Sting is monitoring those efforts very closely.

 

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Gender parity has a huge role to play in the fight to save our oceans

UN chief praises Malaysia’s death penalty repeal as ‘major step forward’

3 ways to fight short-termism and relaunch Europe

Amid ongoing fighting in northeast Syria, hundreds cross Iraqi border in search of safety

Terrorists potentially target millions in makeshift biological weapons ‘laboratories’, UN forum hears

At least 2.5 million migrants were smuggled in 2016, first UN global study shows

Syria: WHO appeals for funding to sustain critical health care for millions trapped by conflict

Living to 100: why we should plan for more sushi, chocolate and work

FEATURE: Niger’s girls find sanctuary in fistula treatment centres

Foreign direct investments the success secrete of Eurozone

What makes us happy? AI scanned 700,000 journal entries to find out

European Elections: “Web giants” are urging users to vote

Pandemic versus fear

G20 LIVE: World Leaders in Turkey for G20 Summit. Global Economy will be discussed in Antalya

Council Presidency: Floundering with the EU 2014 budget

Antisemitism, intolerance, can be unlearned, Guterres tells New York commemoration

3+1 issues to haunt tomorrow’s EU Summit

What keeps me up at night? Two strategists reply

Ride-hailing apps are making the developing world’s traffic problems worse

Cultivating mental well-being while tackling food insecurity

EU mobilises emergency assistance following floods in Ukraine

High anxiety calls for innovation in digital mental health

Google once more under EU crossfire from a possible record fine and new Right to be forgotten case

Africa must ‘value youth’ in the drive towards lasting peace, young envoy tells Security Council

Rule of law in Hungary: Parliament calls on the EU to act

Polluted lungs: health in the center of environment discussion

UN gears up emergency food aid for hurricane-struck region of Bahamas, as death toll rises

ILO and EIB join forces for more and better quality employment

Monday’s Daily Brief: WFP mulls ‘last resort’ Yemen aid suspension, top peacekeeping awardee announced, abuzz over Bee Day, Ebola threat ‘very high’

Parliament asks for the termination of EU-US bank data deal

Ending extreme poverty crucial to sustainable future for all: UN chief

Military operation in northeast Syria could see unintentional release of ISIL affiliates: UN chief

Guterres condemns killing of Bangladeshi peacekeeper in South Sudan, during armed attack on UN convoy

Trump ostracized by his party and world elites but still remains in course; how can he do it?

How COVID-19 has changed what we search for online

The EU slams Theresa May’s Brexit option; sets base for own European defense, security platform

25 years on from landmark conference, millions of women and girls still in danger: UN deputy chief

Unity, regional cooperation and international support needed for Horn of Africa to develop sustainably

The European Parliament wants to stay in one place

With millions of girls ‘at risk’ today of genital mutilation, UN chief calls for zero tolerance

State aid: Commission refers Greece to Court for failure to recover incompatible State aid from mining company Larco

5 reasons why the role of WTO Director-General matters

Q&A on the 19th China-EU Summit to be held on 01-02 June 2017 in Brussels

Powering through the pandemic

A new catastrophic phase in the Syrian carnage

Ensuring the ‘lungs of the planet’ keep us alive: 5 things you need to know about forests and the UN

European Youth Capital 2019 announced: Novi Sad, Serbia

Facebook and Google to treat Europe as the 51st State of the USA

Climate change and health: creating global awareness and using earth resources wisely

The growing cyber-risk to our electricity grids – and what to do about it

Germany and OSCE support an east-west dialogue in Ukraine without exclusions

ECB settles the bank resolution issue, makes banking union tangible

UN rights chief ‘alarmed’ by upsurge in attacks against civilians in Syria’s Idlib

Is Universal Health Coverage really available for all in the European Union?

Top UN officials sound alarm as Yemen fighting nears vital hospital in port city of Hudaydah

Brexiteer May gets lip-service from Trump and Turkish promises from Erdogan

Oslo leads the way in ‘Breathe Life’ campaign for cleaner cities in climate change era

‘Education transforms lives’ says UN chief on first-ever International Day

Still recovering from devastating cyclones, Mozambique, in UN address, warns of global warming’s ‘nefarious consequences’

Statement by Frans Timmermans, Executive Vice-President for the European Green Deal, on the announcement to postpone the COP26

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s