Speaking Points EIN ALBUFEIRA (19/06/2014)

Transcription

1 Speaking Points EIN ALBUFEIRA (19/06/2014) Round Table - Financial Issues José Manuel FERNANDES MEP, Member of the EPP Group in the European Parliament, Member of the EP Committee on 'Budget' Christof KLITZ, Head of the Volkswagen Group EU Representation,Vice-President of the European Movement International Román ESCOLANO, President, Instituto de Crédito Oficial (ICO) Jacques DELPLA, Adjunct Professor, Toulouse School of Economics Antonio García del RIEGO, Director European Corporate Affairs, Banco Santander Introduction Thank you for having invited me as speaker today. I m happy to take the floor as a representative from real-economy and I m sure we will have an interesting debate with my other distinguished colleagues/ co-speakers representing the financial industry, academia and the European Parliament. My task today on the one side is to evaluate on EIN s contribution and added-value related to the development of a sound framework for financial policies during and in the aftermath of the crisis. Secondly I was asked to elaborate on the impacts of financial policies on the real economy and prerequisites needed in order to set up a comprehensive future-oriented European industrial policy for the next decades. Consequently in the first part of my speech I want to shortly wrap-up on which issues related to financial affairs EIN has been working in the past years, and then in a second step address the topic of the roundtable from an industry s perspective. 1

2 PART I - EIN s contribution and added-value for the political debate on EU financial issues Since 2002 (founding year of EIN) European policy makers, but also business, civil society and academia have been gathering in a pan- European setting in order to discuss center-right strategies, new ideas and best practices of how to address the social, economic and foreign policy challenges Europe is facing today. Financial issues and the question of the EU s future economic and financial governance have been at the center of attention at all EIN Summer Universities of the past years (Vienna, Budapest, Bucharest, Berlin and last year in Porto just to name a few). Besides that EIN has been regularly organizing seminars and workshops related to financial issues and the financial and economic architecture of the European Union in order to engage in academic, constructive and controversial debate on the future of the Economic and Monetary Union. During the past years EIN s debates on financial issues were largely framed by the development of the economic, financial and sovereign debt crisis. Decision-making on the political level was largely impacted by the reaction of the markets: EU leaders had to deliver; otherwise there was immediate sanctioning by the market. The lessons learned from crisis have led to successive reforms of the EU's rules, introducing, among other things, new surveillance systems for budgetary and economic policies, and a new budgetary timeline for the euro area. 2

3 EIN continuously monitored and accompanied those developments and crisis measures on an academic level giving policy recommendation from a pan-european perspective. EIN mainly elaborated on two main areas of reform/response: o 1) Monetary Governance in the EU and o 2) Tools & Instruments of Economic Governance 1) Monetary Governance in the EU: EIN stressed the need to address the constraints that derived from a common monetary policy and divergent, fiscal policies at national level. Debates in the past years proved that in order to deliver sound policies, fiscal discipline and structural reforms were a pre-requisite. Given EIN s outside-in focus on financial policy, discussions showed quite clearly that growing economic interdependences of the European Member States within the single market and in the Eurozone require comprehensive and deepened economic governance. 2) Tools & Instruments of Economic Governance: Within the context of recent EIN s summer universities participants examined the tools and instruments the EU has been equipped with in order to prevent future crises: o European Financial Stability Facility (EFSF), European, Financial Stability Mechanism (EFSM) and European Stability Mechanism (ESM) three mechanisms were created to provide financial assistance to Member States in financial difficul- 3

4 ties. ESM as a permanent crisis resolution mechanism, which replaced the EFFM. It has a more comprehensive set of lending instruments, which are all subject to appropriate conditionality. o Economic governance (6-pack, 2-pack) The Economic and Monetary Union needed a more robust framework for economic and fiscal coordination. The 6- and 2-packs, known as economic governance package, lay the necessary foundations. The adoption of this package, together with other measures, aimed at mainly restoring sustainable public finances and carrying out structural reforms, which are already showing positive results. Conclusions: EIN s added-value when it comes to the debate of the development of financial policies during and in the aftermath of the crisis is its pan- European approach that unveils the multifaceted nature of the crisis we have been facing in the EU. The crisis is perceived differently in every EU Member State and in consequence needs coherent crisis-response on national, but also equally on European level. EIN seminars and conferences during the last years underlined that the crisis was not only a sovereign debt crisis, a banking crisis or a crisis of the euro as such, but it is ultimately also a crisis of the real economy, which needed to be resolved by finding alternatives to public spending and pure injections of market liquidity in order to boost growth and employment on a sustainable level. 4

5 EIN has been able to offer an alternative political concept of crisis response related to financial policy which takes into account the new instruments of economic governance as necessary tools in order to overcome and correct macroeconomic imbalances that still exist between the Member States in the EU. Apart from that it is common sense that structural reforms must be at the core of future economic and financial policy in order to restore our financial markets and economic competitiveness within the EU. EIN has been able to address these pressing challenges in the past thanks to its expertise coming from academia, politics, business and civil-society from the EU but also abroad lifts the debate about future economic governance of the EU to a higher gear by shifting away from national framings to a pan-european and often even global context involving all stakeholders in constructive and critical debate. PART II - impacts of financial policies on the real economy and prerequisites of a future-oriented European industrial policy As already stated before the multifaceted nature of the crisis in Europe are becoming apparent impacts on the EU and its Member States in the form of a sovereign and financial debt crisis, but also a crisis of the real economy. The reforms undertaken over the last three years are unprecedented. Still, despite new mechanisms of economic governance and continuous structural reforms the economic situation in some countries of 5

6 the EU remains critical (high rates of unemployment, economic stagnation, rising political tensions). In the following I will outline some policy recommendation for EU decision-maker how to engage in constructive debate about the EU s future political and economic weight in an increasingly globalized world: Policy drivers to foster jobs, growth and industrial competitiveness 1) The EU needs a robust framework for economic and fiscal coordination ( adopted measures are an important step towards sound economic governance). o Crisis has demonstrated how much the interdependence of our economies has increased since the foundation of the EMU. o European real-economy is as well heavily interlinked with the EU s financial and monetary performance. 2) Companies and industry need a stable economic environment which provides security to make long-term investments in the EU as a remaining and future viable growth market. o The EU has to find coherent ways in order to deploy and implement European financial instruments, based on effective combination of the Horizon2020 funds, the structural funds and national funding in order to pursue innovation, investment and reindustrialization. Moreover the completion of the banking union is a priority given its important rules in eliminating the fragmentation of the EU financial market. 6

7 o EU real economy is in need of better access to lending in order to push important long-term industrial projects. Here the EU should take into account systemic and non-systemic issues that can improve the lending capacity of banks and unlock alternatives to bank finances. It is vital that the fragmentation of the financial markets will be overcome in order to create more favorable competitive conditions for European industries. Reforms have to strike the right balance between increasing financial stability and the support of European industries need for capital to make sustainable and well considered investments to foster growth and innovation. The EU has to conduct a coherent financial policy that does not overburden the real-economy. In this context the most important task is to streamline regulatory rules especially on level-2-legislation: o Example: EU Commission which is currently preparing delegated acts on the liquidity coverage ratio (LRC) and on Solvency II, which until recently did not consider asset back securities (ABS) from auto banks as high level assets and therefore ran contradictory to the EU s overall approach to revitalize the securitization market also with the help of real-economy. 3) Research, development and innovation can be Europe s driving forces in order to create healthy and sustainable economic structures. We should not forget that industry forms an essential part on Europe s way back to economic recovery. It is import to mainstream industry-related competitiveness concerns across all policy areas 7

8 which means that EU policy decisions on energy, on transport, but also on financial issues and on the internal market must be made more coherently and better interlinked. Conclusions EU institutions and Member States equally need to restore public and market confidence in the EU as a future growth market for European investors but also on a global scale. Increased financial stability will be rewarded by the markets and in consequence directly impact on the European business environment. In this context besides improving the lending capacities of banks the EU should consider alternatives to bank finances. Reforms have to strike the right balance between ensuring the right level of financial stability and supporting EU companies need for capital in order to create a healthy environment to encourage investment and growth. Europe needs a coherent re-industrialization strategy with clear implementation goals in order to enhance our industrial competitiveness without placing regulatory burdens on the European industries. In order to boost job and growth European business have to invest more in research and development. In order to assure long-term planning security EU has to provide a framework that fosters innovation and provides the best financial and legal conditions for European enterprises, including SMEs. If trust in the EU as the right actor to deliver solutions can be restored and the fragmentation of the financial markets can be overcome, we 8

9 would already be on the right track to increase our global competitiveness based on a successful European reform agenda. 9