04/07/2011

Parliament pushes for strong economic governance and global stability
Special committee on the financial, economic and social crisis completes its work

by Daniel Köster, Austrian Press Adviser

Europe's economy has gone through the most difficult crisis for many years. At the beginning of the new parliamentary term in autumn 2009, the European Parliament decided to set up a special parliamentary committee to analyse and evaluate the extent of the financial, economic and social crisis and to provide comprehensive recommendations for future structural policies. The aim of the committee was to propose appropriate measures for the long term reconstruction of sound, stable financial markets, able to support sustainable growth, social cohesion and job creation. The members of the committee had a difficult task: no more, no less than to provide a comprehensive analysis of the crisis and to document the lessons to be learned.

The work of the committee went on until summer 2011, with the committee's final report being adopted in plenary at the beginning of July 2011. The report consists of five chapters which first provide an analysis and then give concrete recommendations.

The findings of the Special Crisis Committee

The euro crisis is a sovereign debt crisis

Under the heading "European sovereign debt and the euro crisis, including the mutual issuance of public debt and Eurobonds", the committee comes to the following conclusions:

• The EU needs strong common economic governance.


• To avoid future crises and to guarantee stability the EU needs its own resources.


• It is necessary to streamline spending in an effort to 'do more with less'. Spending that can be more efficient at European level than at the national level and which provides European added-value, should not be part of national budgets.


• The Parliament calls on the Commission to carry out an investigation into a future system of Eurobonds.


• The permanent European Stability Mechanism (ESM) should be converted into a European Debt Agency and the concept of a European Treasury should be developed to strengthen the economic pillar of European Monetary Union.

European stability needs a framework of global governance

Global imbalances and a lack of global governance are one of the reasons for the crisis. That is why the report concludes that a global economic rebalancing is needed.

• Europe should aim at achieving a balanced, free and fair global trade agreement in order to reduce contrasts between emerging economies and developed ones.


• The European Union needs coherent representation at international level and in international institutions.


• Far-reaching reform of global economic and financial governance, including the IMF, is needed.


• The crisis has highlighted the need to create incentives for markets to promote long-term investment and sustainable development. The Millennium Development Goals must be achieved.

The case for a new monetary system

• The International Monetary System needs to be reformed in such a way as to ensure systematic and comprehensive macroeconomic cooperation with sustainable and balanced global growth.


• Exchange rates need to adjust to macroeconomic fundamentals.


• A global reserve currency needs to be created.

Boost Europe's competitiveness

Europe must adapt to global challenges. Therefore EU competitiveness and sustainability must be increased. The EU 2020 strategy must be implemented by fostering innovation and long-term investment for jobs and growth.

• The full potential of the EU's Single Market must be realised, especially the service sector.


• SMEs have a key role in the economy and as a major and privileged source of innovation, as well as being the sector which creates the overwhelming majority of jobs. Measures are needed to support this sector by reducing administrative burdens on SMEs, by fostering entrepreneurship and ensuring market access.


• The EU 2020 strategy should include binding targets drawn up by the Commission for Member States, with maximum and minimum values to be reached.


• Education needs to be at the forefront of the drive to increase competitiveness.


• The EIB (European Investment Bank) should have a more prominent role in enhancing the catalytic role and leverage function of structural funds.


• 'Project bonds' shall be introduced in order to tap private capital to meet the needs of Europe’s infrastructural challenges.

Re-thinking the EU

The European Union is at a crossroads: either the Member States decide to join forces in deepening integration or, owing to stagnation at the decision-making level and divergences at the economic level, the EU could drift apart.

• Economic governance, with converging economic, fiscal and social policies, must be organised using the Community method.
  
• Tackling the public debt crisis and increasing the EU’s competitiveness, convergence and solidarity require a shift of competences and spending towards the Union.
  
• The EU Budget needs to be raised while national budgets should be reduced to ensure tax neutrality for citizens.
  
• The further building of the Social Market Economy is an essential goal of the EU.
  
• A European response to the crisis must be based on deepening European integration.
  

The work of the EPP Group in the special committee has been coordinated by Austrian MEP Othmar Karas. The Group's Shadow Rapporteur was Finnish MEP Sirpa Pietikainen.