A Sting Exclusive: “Doing ourselves a favour”, Vice President Dombrovskis underscores that this time growth has to come from within the EU

Mr Valdis Dombrovskis is the Vice-President of the European Commission responsible for the Euro and Social Dialogue (Source: European Commission)

Mr Valdis Dombrovskis is the Vice-President of the European Commission responsible for the Euro and Social Dialogue (Source: European Commission)

This article was exclusively written for the European Sting by Mr Valdis Dombrovskis, Vice-President of the European Commission responsible for Euro and Social Dialogue.

Last month, the European Commission presented the spring economic package related to the European Semester. It included the annual country-specific policy recommendations to individual member states and the Commission’s latest assessment of the fiscal situation of a number of countries. With global markets making waves, and with clouds on the political horizon, the importance of this effort is great. While the economic case for maintaining the reform momentum is clear, the question remains: can we get the politics of reform right?

So far, the European Union has not allowed itself to be blown off course. The European economy continues to grow slowly but steadily. In 2015, EU GDP expanded by 2.0% and by 1.7% in the euro area, its best performance since 2010. But for more than a year we still had the benefit of a good combination of external and domestic tailwinds. According to our latest economic forecast, the euro area is expected to grow at 1.6% in this year and 1.8% next year.

Yet there are uncertainties, mostly related to global growth: while the US economic cycle is maturing, growth in emerging markets is expected to pick up marginally in 2016 as commodity prices stabilise and the recessions in Brazil and Russia ease. Besides, the challenges surrounding an orderly rebalancing and gradual slowing of the Chinese economy remain pressing and entail certain risks. Hesitant global growth, weaker global trade and – unmeasurably but unmistakably – increased political uncertainty could weigh more heavily on our prospects than was previously expected. On the positive side, there are still low oil prices and lagged effects from the weak euro exchange rate.

In all, it is clear that, internationally, no-one is doing us any favours. So we have to do it ourselves. Even more than before, the effort and the impetus for growth need to come from within.

Are we doing this? Sufficiently? The bottom line of the spring economic package was only moderately positive: the Commission’s overall assessment was that countries have made between ‘limited’ and ‘some progress’ in implementing their country-specific recommendations. On the fiscal side, government deficits in the euro area is set to fall to 1.9% of GDP this year, down from a peak of above 6% of GDP in 2009-2010. But serious adjustment efforts are still needed in a number of countries where debt is still a persistent vulnerability.

We should be making more progress across the board. On the one hand, some governments are showing a somewhat belated sense of urgency but, on the other hand, there are still those harbouring a possibly false sense of security.

This is not good enough. Safeguarding the stability of the euro area and of the EU as a whole can only be done if reforms are maintained in the areas most needed. Moving forward together is a precondition for stability. In doing so, we have to get the politics of reform right as well as the economics.

With the spring economic package, the political agenda for the next 12 to 18 months of structural reform is now outlined, with clear priorities for all countries individually. There are fewer, yet more focused, policy recommendations to Member States than in previous years, and with more attention to social and employment aspects of reform. The recommendations are based on the Commission’s analysis of the economic and social situation in each Member State, or so-called “country reports”, and they are the culmination of consultations with governments, national parliaments, social partners and stakeholders.

Because experience since the crisis has shown that a sense of ownership is the key to successful reform. Being right is not enough. It’s also about being heard. Convincing both politicians and public opinion of the need and the benefits of reform is therefore necessary.

The European Business Summit has a role to play in this.

Targeted reforms have proved to work: countries that have implemented ambitious reform programmes, such as Ireland, Spain, Portugal and the Baltic States are now catching up, with some of them even marking the highest growth rates in Europe. This translates into new jobs, less poverty and less social exclusion.

Sound public finances create room for public investment, leave room for automatic stabilisers to work and, by creating certainty and predictability, contribute to attracting private investors.

We need to tell the story of how a business-friendly environment, well-functioning labour, products and services markets, and modern and efficient public administrations are the best preconditions for investment, and hence to create jobs.

And we need robust systems in place to address and nurture an ageing European population. This is why it is so important to modernise our pension, health and social systems, making them more sustainable and cost-effective, while ensuring the best quality care for current and future generations.

All this is far from easy. Reform requires political courage to tackle powerful vested interests. It often brings costs with it, and technical complexities. Mere legislation is not enough. Effective implementation is what counts, and that is the hardest part. To support implementation, the Commission has set up a dedicated service and tabled a proposal for a financial instrument – a Structural Support Reform Programme – to provide support at the request of Member States.

Of course, such reforms are primarily to the advantage of the countries concerned, but in an EU where one economy’s health matters so much for others’ wellbeing, they are also vital to everyone’s success. There too, we’re only doing ourselves a favour.

The crisis has convinced us of the need to complete the Economic and Monetary Union’s structures. We must restore the EMU as an engine for convergence within and between Member States, providing stability and underpinning prosperity. Building a consensus that EMU works to our benefit is a prerequisite to finish that effort.

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Advertising

Featured Stings

A voice from Syria: the positive prospect of clinical research despite the excruciating circumstances

The EU Commission does nothing about the food retailing oligopoly

EU readies for eventual annulment of the Turkish agreement on immigrants-refugees

Can We(esterners) ever understand (the) Chinese

The EU Parliament slams Commission on economic governance

Juncker Investment Plan for Europe welcomed by European Youth Forum

Spirit unlimited

Switzerland to introduce strict restrictions on executive pay

The 13th round of TTIP negotiations hits a wall of intense protests and growing concerns

Refugee crisis update: EU still lacks solidarity as Hungary and Slovakia refuse to accept EU Court’s decision

The battle for the 2016 EU Budget to shake the Union; Commission and Parliament vs. Germany

Trailing the US-EU economic confrontation

Is it true that the G20 wants to arrest tax evasion of multinationals?

Conflicting statistics and bad banks haunt the Eurozone

The EU risks trade relations with China over the Tata hype about steel

The European Parliament x-rays the troika’s doings

How ‘small’ is Europe in Big Data?

Has the EU economy truly revived from the financial crisis?

Jo Cox’s murderer believed the ‘leave’ campaign leaders that the ‘remain’ vote is treason

A Sting Exclusive: “The challenge of Society’s digital transformation”, Spanish Minister of Spain for Industry, Energy and Tourism José Manuel Soria live from European Business Summit 2015

Vĕra Jourová, European Commissioner in charge of Justice

The New EU-US “Shield” for data privacy is full of holes

MWC 2016 LIVE: Mobile Connect availability hits 2B

Long live Eurozone’s bank supervisor down with the EU budget supremo

Poverty and social exclusion skyrocket with austerity

The EU threatens to impose extra import duties on Chinese products

Court of Auditors: EU spending infested with errors well above the materiality threshold of 2%

Inegalitarian taxation on labour haunts Europe’s social model

New round of bargaining for the 2014 EU budget late in autumn

What are the real targets of EU’s efforts to fight tax evasion?

Does the Greek deal strengthen the Eurozone? Markets react cautiously

A new European banking space is born this year

The ECB still protects the banks at the expense of the EU taxpayers

Russia and the EU ‘trade’ natural gas supplies and commercial concessions in and out of Ukraine

The EU responds to US challenges by fining Apple with €13 billion

The EU Commission openly repudiates the austere economic policies

EU and African leaders to jointly tackle the migration crisis across the Mediterranean

Eurozone: A Sluggish economy offers no extra jobs

EU: 13 major banks may pay fines 10% of worldwide turnover

Eurozone: The crisis hit countries are again subsidizing the German and French banks

European Business Summit 2013: Where Business and Politics shape the future

The Chinese spirit

Trade protectionism and cartels threaten democracy

The G7 fails to agree on growth but protects the big banks

The European Internet is not neutral and neither is the Commissioner

“Is Europe innovative? Oh, Yes we are very innovative!”, Director General of the European Commission Mr Robert-Jan Smits on another Sting Exclusive

A Sting Exclusive: “Sustainable development goals: what role for business?” Commissioner Mimica asks live from European Business Summit 2015

Theresa May’s global Britain against Philip Hammond’s Brexit fog

Resolving banks with depositors’ money?

The time is up but the game is still not over for Greece: negotiations continue in anticipation of a new deal

Solitary Britain sides with US aggressing Russia and chooses hard Brexit

Auditors say EU spending delivers limited value for money but the timing of their report poses questions

On Brexit: the outcome of UK elections next May to be based on false promises?

COP21 Breaking News_03 December: UNFCCC Secretariat Launches Forest Information Hub

War of words in Davos over Eurozone’s inflation/deflation

Businesses succeed internationally

EU out to conquer African Union summit

Why and how Germany had it again its own way in Cyprus

The European Youth raises their voices this week in Brussels at Yo!Fest 2015

JADE Handover Ceremony at the European Parliement

EU Parliament: Follow the fraudulent money and confiscate it

More Stings?

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 )

Twitter picture

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

Facebook photo

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

Google+ photo

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

Connecting to %s