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02 January 2014

Reding/Rehn: Why we cannot let up in 2014

The light at the end of the tunnel after years of crisis is weak but clearly visible, argue two of the Vice Presidents of the EU Commission, Viviane Reding and Olli Rehn.

Translated from the German

At the end of 2013 we can look back on a year in which the EU has begun to overcome the crisis. The light at the end of the tunnel is still weak - but it is clearly visible. Of course, for many European citizens the difficult times are not over yet. However, the Europeans have at the beginning of the new year a few reasons to look to the future with confidence:

Not long ago, many considered the breakup of the eurozone a realistic danger. However, since 1 January 2014 there are in fact more, not fewer countries that use the euro as Latvia is the 18th country to join our common currency. Just two years ago, Latvia was struggling to get out of a very deep recession, supported by an EU-IMF programme. Today it has become the fastest growing economy in the EU. Even Ireland has emerged strengthened from a very difficult reform programme after years of crisis. These examples demonstrate clearly that Europe's strategy to combat the crisis is effective.

The core element of this strategy is the idea that solidarity can only work in exchange for solidity. Member States that are in financial difficulties get help from the others. The prerequisite, however, is and remains a strong political will of the supported Member States to eliminate their cumulative imbalances by means of reforms and to put their finances on a sustainable footing.

The reform process is still hard on a great number of citizens. However, Europe has contributed with its support to the fact that the impact of the crisis in countries like Greece and Portugal has been much less painful than it would otherwise have been the case. Economic recovery has been back in Europe since the summer and is expected to accelerate in 2014. The most recent unemployment data show a trend reversal, and Europe's highest employment growth in the third quarter was measured  in Ireland and Portugal.

Three points are crucial if we are to emerge stronger from the crisis:

  • First, Europe must continue with structural reforms in order to create the conditions for exploiting the benefits of free trade, for greater productivity and innovation and thus for more economic and social prosperity.
  • Secondly, Europe needs a well-functioning banking system in order to encourage investment and to finance the necessary structural change. The main pillars of the European Banking Union are currently being built.
  • Thirdly, we need solid rules for a European economic and financial policy. This autumn, the Commission has examined the first time the draft budgets of the eurozone countries for the coming year - a big step forward in the coordination of economic policies.

In short: All the efforts that the Europeans have taken to overcome the crisis are paying off. Of course, there is no reason for complacency - much remains to be done. We will have to make difficult decisions and need patience and resilience. But if we maintain the course of reform, Europe can look forward to a strengthening economic recovery in the coming year and beyond.

Full article (in German)

Also published in the The Times of Malta


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