10 July 2012

Vice President Rehn's remarks at the ECOFIN press conference

Commissioner Rehn welcomed the Council's adoption of a revised recommendation for Spain to correct its excessive deficit by 2014. "This means that this year's target will be 6.3 per cent fiscal deficit for Spain, leading then in 2014 to 2.8 per cent".

"In this context, the key actions asked of Spain are to ensure the achievement of these new targets by adopting and implementing measures in the budget of 2012 and in the rebalancing plans of the autonomous regions; as well as by the rapid adoption of additional measures to ensure the achievement of the fiscal target for this year, given the challenges to meet it; and of the adoption, by the end of this month, of the announced bi-annual budget plan for 2013-14. I am confident that the Spanish authorities will adopt convincing measures within the agreed timeframe. This will send a strong signal of Spain's commitment to sustainable public finances, which are essential to sustainable growth and employment.

The Commission will closely monitor Spain's compliance with its EDP commitments in parallel with the conditionality linked to the financial assistance for recapitalising and restructuring its banking sector, on which the Eurogroup reached a political understanding last night. In that context, the conditionality will be bank-specific and sector-wide.

Minister Vassos Shiarly already explained the decisions and our line concerning the single supervisory mechanism for banks in the euro area and on direct bank recapitalisation. I will not repeat what I said last night. I just underline that, allowing the ESM to directly recapitalise banks, once the conditions are met, is a cornerstone of our efforts to break the vicious circle between banks and sovereigns. Once in place, this will be a powerful tool to ease pressure on sovereigns in the euro area.

In line with the Euro Summit agreement, the Commission will present, early September, a proposal for a single supervisory mechanism for banks in the euro area, involving the ECB. Second, regarding the two proposed regulations for further strengthening the economic governance of the euro area, on which the Council has agreed its negotiating position in view of the first trilogue, which will take place tomorrow. These proposals are an important next step in reinforcing economic and fiscal surveillance, building on the so-called six pack on reinforced economic governance, and putting into effect some of the key provisions of the Fiscal Compact Treaty. It is important that these proposals enter into force as soon as possible. We very much look forward to working together with the Cypriot Presidency and the European Parliament to achieve this. We need to put in place these important building blocks, which are part of the solid foundations of the EMU 2.0 that we are now currently building. We are essentially rebuilding the Economic and Monetary Union.

And third, let me welcome the formal adoption of the 2012 Country-Specific Recommendations by the ECOFIN Council. This brings to a close the second European Semester of economic policy coordination, which is the framework through which Europe is effectively, and coherently, implementing an agenda of reform. The ball is now in the court of the Member States to effectively implement the commitments they have now formally made. The Commission will, of course, closely monitor compliance with these commitments, which are a tailored, operational manifesto for stability, growth and jobs in each of our Member States."

Full speech

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