Let me begin by wishing Greece a successful and smooth Presidency on behalf of the European Commission. We very much look forward to working with you to take forward our common agenda of sustainable growth, job creation, better cohesion as well as to work towards a deep and genuine EMU.
I would like to say a few words on three things. First, on the challenges of the Presidency; second, on the current economic outlook in Europe; and third, on Croatia.
On the Presidency challenges in the first half of this year, first, we must work to reach a final agreement in the coming weeks on the Single Resolution Mechanism and a Single Resolution Fund so that these can begin to be implemented without delay.
Second, we must ensure that all Member States maintain the momentum for economic reforms and sound public finances. We now have a well-established framework for economic policy coordination, in the form of the European Semester, of which we are now in the fourth yearly cycle.
And third, in early June, the Commission will present the next Convergence Report on the readiness of Member States to join the euro area, for discussion under the Greek Presidency.
This is particularly relevant for Lithuania, which aims to follow the path of Estonia and Latvia as members of the euro area. We will assess the convergence of Lithuania in this convergence report during the Greek Presidency.
On the economic outlook, our expectations of economic developments over the coming six months are for a gradually strengthening economic recovery in Europe. As I outlined at the ECOFIN Council this morning, since we last met in December, economic data for Europe has continued to be encouraging. Domestic demand has made a positive contribution to GDP growth, with investment expanding further and household consumption continuing to grow moderately. Consumer confidence in the EU has reached its highest level since January 2008. Sentiment in the euro area sovereign bond market has kept on strengthening.
At the same time, the market turbulence of recent days, even though it mainly stems from emerging market economies rather than in Europe, is a reminder that we cannot afford any complacency. The high level of unemployment in many Member States is another very important reason why we cannot rest on our laurels.
Therefore, all of us in Europe must stay the course of reform in order to continue to rebuild confidence, strengthen the nascent recovery, and bolster our defences against external shocks.
Let me conclude with a word on Croatia. With today’s adoption by the Council of a Recommendation to correct the excessive deficit by 2016, a clear path is set out for restoring sustainability to Croatia’s public finances.
It will be essential for Croatia to take decisive action to achieve this, in order to restore confidence in the economy and create the conditions for a sustainable recovery in growth and job creation.
This means that, by April, Croatia is asked to undertake adequate and sufficiently specified and quantified measures to ensure progress towards the correction of its excessive deficit and debt. The Commission will assess whether effective action has been taken by Croatia later on, in the course of this spring, as part of the process under the European Semester.
I want to underline to the Croatian people that this process is a partnership; a partnership between Croatia and the European Union. The Commission will work closely with Croatian authorities to support their efforts to address the challenges the economy is facing and to build a strong basis for economic recovery, based on sound public finances.