22 January 2016

EurActiv: Moscovici: Europe is less vulnerable than other regions to China slowdown

The IMF wants more cuts. Does the Commission share the Fund's position?

Together, we want a pension reform which is ambitious enough to conclude rapidly the first review, so everyone is reassured that the programme is on track. Of course, I insisted on the fact that the first draft of the pension reform was appreciated, because it was more comprehensive and ambitious than what we saw before. But still there are some issues to adjust, some efforts to be made.

Is the pessimism around this year's Davos forum justified?

I will give the EU forecast in two weeks from now. Other institutions are more pessimistic when it comes to global growth, especially because of what is going on in the emerging countries. We all have to care about what is going on in China. The markets are nervous.

But if I look at the European economy, I don’t see any special reason to change our message, which is that the recovery is on track. The recovery has a solid basis due to an appropriate monetary policy; structural reforms, that of course have to be pursued; fiscal consolidation, which is impressive, even if some countries have to maintain the necessary structural adjustments; and also because of the ‘Juncker plan’, which must be accelerated, but can be a success.

Of course there are downside risks, but we feel we are less vulnerable than other parts of the world to a possible slowdown of the Chinese economy. For the time being, the climate here in Davos is not optimistic, but we are not getting back to the financial and the economic crisis of 2007/2008.

Regarding Spain, the Commission's message is that a stable government is needed to continue with reforms. However, the outcome of the last election was a fragmented scenario, with some parties in favour of unraveling the reforms. Is the recovery at risk?

We will be capable of dealing with these important questions when there is a government which is stable. It is up to the Spanish people to choose the formula they want. Once a solution is found, we will have to go back to reality and the European rules that we all have to follow. In my view, the Commission's opinion on the Spanish budget is still valid.

Does it mean that you will improve the Spanish growth forecast?

We must be also conscious that the need for structural reforms and adjustments won’t disappear with a political solution in Spain. We will integrate the upcoming information. First,  the economic forecast and, after, the definitive fiscal data from Spain.

The Spanish economy is in full recovery with an impressive growth and we want that to go on. The Commission’s intention is not to break the conditions of this recovery. But we know how big is the unemployment rate in Spain. In addition, when we look at the fiscal situation, both the nominal and the structural deficit,  it seems that some adjustments must be made if you want to fulfill the rule. We will discuss that after a political situation is found. But of course it is better to have a stable government to deal with that.   

Full interview on EurActiv

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