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Speech: Remarks by Vice-President Dombrovskis at the European Commission press conference on the Autumn Economic Package

Met dank overgenomen van V. (Valdis) Dombrovskis, gepubliceerd op woensdag 16 november 2016.

Good morning,

Today, the College adopted the "Autumn economic package", charting the course ahead for Europe's economic and social policy.

We are living in times of slow economic growth, geopolitical risks, and increased uncertainty - not least following the UK referendum and last week's US elections.

But our Semester Package also comes against a backdrop of a continuing moderate economic recovery. The EU economy has proven to beresilient, in the context of the current political and global economic challenges:

  • All EU economies are expected to grow next year - for the first time since the crisis;
  • Investment is picking up - although at a slow pace;
  • Average debt and deficit levels are decreasing;
  • Growth is increasingly job-intensive. 8 million jobs have been created since 2013 and unemployment is continuing to fall.

Marianne will talk more about employment trends and social aspects of the package.

Our task now is to strengthen the recovery, aiming at more sustainable and more inclusive growth.

In the light of this, today's Annual Growth Survey confirms that three elements of the virtuous triangle of our economic policy remain valid. These are:

  • boosting investment,
  • continuing structural reforms, and
  • ensuring responsible fiscal policies.

Let me start with investment.

The Investment Plan for Europe is working. EFSI has mobilised €137 billion in 27 Member States in just over a year and we want to expand it - doubling it to €630bn by 2022 and improving its geographical and sectorial coverage.

EU funds are also a very important source of investment, especially for cohesion countries. Now, while we are in a transition period between the previous and current budgetary planning period, we unfortunately note some slowdown in the absorption of EU funds in these countries and it is also slowing down economic growth. It is important to speed up absorption and use the funds effectively.

Second, on structural reforms: Member States that have modernised their economies to make them more competitive are now amongst the fastest-growing in the EU.

Dealing with structural problems in our economies, and there are still many, we clearly see efforts paying off.

Third, on fiscal responsibility: high public debt and deficits continue to hold back growth in some Member States. In these times of increased uncertainty, it is important to pursue sound and responsible budgetary policies. The overall picture is improving: the EU average public deficit is set to decline from -2% in 2016 to -1.7% in 2017. Also EU average public debt is on a declining path, from 86% in 2016 to 85.1% in 2017.

In recent years, we have strengthened the social dimension of the European Semester. We underline the importance of the fight against poverty and social exclusion and of tackling inequalities, both between, and within, Member States. We need to foster convergence towards the best performers in the EU.

A novelty of this package is the communication on the positive fiscal stance for the euro area.

President Juncker's State of the Union speech and the related Letter of Intent launched this process. Consequently, today's College adopted a communication calling for a positive aggregate fiscal stance.

Of course, such an orientation should build on the legal framework set by the Stability and Growth Pact and take into account of broader fiscal sustainability concerns.

Member States that need to correct excessive deficits, and others that still need to progress towards their medium-term budgetary objective, should continue to do so, as recommended to them.

Member States with fiscal space should be encouraged to carry out more expansionary fiscal policy, in particular by boosting investment.

The communication also stresses that better composition and quality of public finances can contribute significantly to growth. Quality of public spending is just as important as quantity.

The fiscal stance communication is part of the integrated policy assessment in this package. Let me underline that it goes hand-in-hand with structural reforms.

To quote the Annual Growth Survey: "lifting the EU's growth potential requires first and foremost structural policies to boost employment and productivity".

The College has also just adopted the Commission's opinions on the euro area Member States' Draft Budgetary Plans.

  • We concluded the following for the 15 Member States in the preventive arm:
  • 5 Draft Budgetary plans are found to be compliant with requirements of the Stability and Growth Pact: Germany, Estonia, Luxembourg, Slovakia and The Netherlands;
  • 4 Member States are found to be broadly compliant: Ireland, Latvia, Malta and Austria; and
  • 6 are at risk of non-compliance:Belgium, Italy, Cyprus, Lithuania, Slovenia and Finland.

For Belgium and Italy, which are currently under the preventive arm of the SGP and must comply with the debt rule, the Commission will come back with reports on their compliance with the debt rule shortly.

For the 3 Member States in the corrective arm, the Commission found:

  • France is broadly compliant; and
  • Spain and Portugal at risk of non-compliance.

As you know, Portugal and Spain submitted their Draft Budgetary Plans as well as reports on action taken to bring their budgets back on track.

The Commission has come to the conclusion that the Excessive Deficit Procedure in both member States should be held in abeyance and, consequently, the event that required a proposal by the Commission to suspend parts of the European Structural and Investment Funds is no longer present, which is good news for both countries.

Pierre will elaborate on this further.

Finally, the College has adopted the latest Alert Mechanism Report, a "screening" system that identifies in which countries there may be macroeconomic imbalances that merit an in-depth review.

We have identified 13 Member States for an in-depth review this year, compared to 19 Member States last year. This means no new Member State will be subject to the review.

I now pass the floor to Pierre.



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