Rehn: there will be a time after the crisis and for that we need a strategy

Olli Rehn, EU Commissioner for Economic and Monetary Policy opened the forum with the statement that the economy was already on the road to recovery. Due to the debt mountain it was now the time to aim at sustainable growth. The strategy of the European Commission would thereby consist of the following three targets:

• Budget consolidation: the public budgets in the EU Countries have to be consolidated to guarantee secure growth.
• Structural reforms: country-specific political reforms have to be implemented in all EU Member States to sustainably increase the growth possibilities in the EU.
• Emphasis on a “green” economy: following the EU 2020 Strategy, which was already adopted in March, this should help to solve environmental problems in future and to strengthen both growth rates and public budgets.

Van Rompuy: We stumbled, but we did not fail

The President of the European Council, Herman Van Rompuy, praised the EU for supporting Greece and the Euro - even if the main motivation was probably more self-protection - and pointed out how important a sustainable budgetary policy was. A “Task Force” has been set up as a consequence of the crisis, which is made up from members, in particular Finance Ministers, of all 27 EU Countries. General agreements shall already be adopted in October. Objectives of the Task Force are among others greater budgetary discipline, future crisis prevention and - in the event of new crises - increased interinstitutional cooperation, to be able to react more efficiently. Van Rompuy underlined that the crisis clearly shows the requirement of improved economic and political coordination. Since the introduction of a single currency, each country in the Eurozone is also dependent on the economy of the other Member States.

Nowotny: the debt as a share of GDP cannot be reduced overnight

Whilst the first discussion was devoted to the development of the global financial and economic crisis, the second part dealt with the consequences for Europe. Thereby, Ewald Nowotny, Governor of the Austrian National Bank, praised the cut in interest rates by the ECB as the way out of the crisis. He also pointed out that public debt could not be reduced overnight. In order to counteract the imbalance in the financial markets, he also came out in favour of introducing structural reforms.

Barroso: budget consolidation and structural reforms cannot be viewed separately

José Manuel Barroso, the President of the European Commission, also spoke of three challenges for Europe, which result from the crisis, in particular a constructive cooperation between the Member States and the EU, the functioning of the finance markets as well as economic and tax adjustments to guarantee growth. Whilst in his opinion the cooperation was already working - as an example he also quoted the support for Greece - he criticised the shortcomings of the financial markets. Only framework conditions would now be created in the area of supervision. Several instruments would already be implemented, such as the new regulation for rating agencies. Barroso also promised the implementation of the financial market reform within the scope of the G20 Conference in Toronto next month. With regard economic and tax adjustments he also talked of structural reforms in order to achieve the long-term sustainability of the budgets. It was also important to continue to strengthen the Stability and Growth Pact and to retain the trust in EU institutions, because the implementation of budgetary rules, which all Member States have to adhere to, can only be guaranteed by EU institutions. 

The recipes presented by the Brussels Economic Forum, which, from the point of view of the employee-side, were rather one-sided, appear to indicate that the misguided economic policy of the past years will be continued in Europe. Practicing austerity in a crisis and so-called structural reforms, which normally amount to yet another deregulation of the labour markets, are not suitable to strengthen the purchasing power and the demand in Europe. It seems that this message has still not reached the European Commission.