Local view for "http://purl.org/linkedpolitics/eu/plenary/2007-07-11-Speech-3-265"
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"en.20070711.25.3-265"2
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"Mr President, Mr President-in-Office of the Council, Mr President of the European Central Bank, ladies and gentlemen, I believe that it is very positive that, for the first time, we are holding this debate on the situation of the eurozone, which is the second we have held, following the first resulting from the first Commission report on the eurozone, and the report on the European Central Bank simultaneously, leading to an overall reflection on the situation of the eurozone, on the functioning of the Economic and Monetary Union and on the prospects for the future.
We have also abrogated the excessive deficit procedure relating to Greece. Excessive deficit procedures are currently still in place for two countries of the zone, Italy and Portugal. If things carry on as they are, by the end of the year Italy will have corrected its excessive deficit and it will be well below 3%, and, if things carry on as they are, then Portugal, if not this year, then next year, will have corrected its excessive deficit by the end of 2008, as requested by the Council.
With regard to the eurozone, therefore, the application of that element of the Pact, which is the best-known element, and most striking element and the element with the strongest and most powerful instruments in the hands of the Commission and the Council, is being carried out satisfactorily.
It is the preventive part that we are concerned with now. The Eurogroup debated it on Monday and Ecofin debated it yesterday. This is the most topical and most difficult debate during economic good times, because during economic good times, it is more difficult, not in economic terms but in political terms, to carry on consolidating public finances and the instruments in the hands of the Commission and the Council to assist in that correction of public finances beyond the 3% limits and towards the mid-term objective of balance in structural terms. They are weaker instruments from a legal point of view and they must be based on political consensus, on peer pressure and on the conviction that that is a necessary condition for sustained growth.
We have recently debated once again – this very week – the situation in Italy, which is one of excessive deficit, but we should now be considering how to move its consolidation process forward, and it is being considered with great difficulty. We are lucky enough not to have to debate the situation in Germany so much, because a lot of progress has been made on fiscal consolidation in Germany. And we have begun to debate the situation in France.
I am going to tell you my opinion on Monday’s debate in the Eurogroup, expanding on what Mr Juncker has said. There is one very positive fact. The French President has promised the Finance Ministers of the eurozone and the President of the European Central Bank and of the Commission that he is going to promote a very serious programme of reforms which he will set out in detail between now and September.
There is also a second very positive fact. He has promised to allocate all of the budget surplus to fiscal consolidation and debt reduction. And something new, at the meeting of the Eurogroup he said, ‘if I can adjust the deficit in 2010, I want to adjust the deficit in 2010’, something that was not clear before the meeting of the Eurogroup. Though it is also true that he added, ‘if I cannot do so, I shall have to do so in 2012’.
That explanation, however, did not end on Monday, because another element of that meeting that I believe to be very important is that the debate on the French budgetary strategy, and the debate on the budgetary strategy of any other country, will take place, just has it has been until now, within the framework of the Stability and Growth Pact, with France presenting a revised stability programme, which will be analysed by the Commission and by the Council and it will be the ministers, meeting within the Council, in the Eurogroup and also within Ecofin, who will give their opinion on the programme of fiscal consolidation and adjustment presented by France.
I believe that this should be stressed because some people have interpreted what has happened over recent days as the second death of the Pact – which some people had claimed was dead in 2003. I believe that it is alive and kicking. The problem is that it is difficult to apply it during good times in the cycle, in certain countries in particular. That is what the pact’s instruments are for, however: to help overcome those difficulties.
I would like to make a final brief comment, Mr President, relating to the importance that the new Treaty will have when it enters into force in terms of giving the Eurogroup more institutional capacity, in terms of improving the governance of the Economic and Monetary Union, which still has a long way to go, both internally and externally. I hope that, in the next debate, the Commission can present you with a full analysis of how the Economic and Monetary Union is functioning and how it should function, on the tenth anniversary of the decision to launch the euro, in May 2008.
I must thank both Mr Rosati and Mr Mitchell for the wonderful reports they have presented to us and the Committee on Economic and Monetary Affairs for the work it has done in the debate on the proposals that we are currently discussing.
The proper functioning of the eurozone is a matter of crucial importance to our citizens. I must tell you from the outset, however, that I am worried that many European citizens, who carry and pay in euros every day, are not showing any great satisfaction with the single currency, at a time when the eurozone's economy is clearly recovering, when economic growth is above our potential - and above that of the United States - when the eurozone is enjoying a recovery, as Mr Trichet has said, based on internal demand, which was not the case a few years ago.
It is a recovery with investment that is growing in a very satisfactory manner and which heralds future improvements in our economy and with an economy that is helping to generate – in the case of last year - two million jobs in the countries of the eurozone. And all of this with a practically even trade balance, with an inflation rate currently below 2% and a stability that any of the world's economic areas would want.
I believe that everybody, the Commission, of course, but also the Council, and in particular the Eurogroup, the European Central Bank and the European Parliament, have the responsibility to explain to our citizens that this European project, eight years after its creation, is currently yielding very good results. I believe that this debate must serve to do that.
But it must also help us to learn from experience, to establish which elements of the Economic and Monetary Union are not functioning as we had imagined eight years ago, and to implement the adaptations and political decisions required in order to make the future better than the present, however positive the present may be. Following the Ecofin meeting yesterday, more Europeans are going to share in this positive present. Yesterday, Ecofin formally adopted the latest decisions required in order to confirm that the eurozone would be enlarged to include Malta and Cyprus on January 2008. On 1 January of this year it was enlarged to include Slovenia. Next year three new Member States will also have joined the Economic and Monetary Union, sharing the single currency with 318 million other Europeans.
I believe that that is a very positive element which was debated yesterday and agreed to everybody’s satisfaction, not just by the 15 members of the eurozone, but also by the other 12 States that do not yet share the single currency, and I believe that that is worth stressing at this point.
With regard to the economic situation, I am not going to refer to it in detail, since both Mr Juncker and Mr Trichet have already done that.
With regard to the application of the Stability and Growth Pact, which I believe relates to this improvement in the economic situation and this economic stability that we are enjoying in the eurozone, I must say, as Mr Juncker has already said, that the application of the corrective part of the revised Stability Pact, the application of the excessive deficit procedures, is having a very positive effect. This year, we have abrogated three excessive deficit procedures relating to three members of the eurozone, including the zone's two leading economies, France and Germany, which are no longer in a situation of excessive deficit."@en1
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