"I know from my own experience as a keen football player that any team needs a meaningful division of labour, based on insightful leadership, individual excellence and smooth, seamless teamwork. To score, we need one or two strikers, but also an astute playmaker and a smooth winger – not to speak of a competent defence. I would like to be remembered as the team player who helped Europe enter a new era of better competitiveness, higher productivity and growing prosperity for current and future generations."
Interview with Commissioner Olli Rehn
1. What is your vision for Europe’s economic future and how does it mesh with the Europe 2020 Strategy?
My vision is clear and simple: jobs and growth for the benefit of all our citizens, within a context of overall macroeconomic stability.
Therefore, my vision fortunately converges with our Europe 2020 Strategy of smart, sustainable and inclusive economic growth. Smart: meaning investing in research, innovation and education to make sure Europe retains its competitive edge. Sustainable: both environmentally and socially. Inclusive: empowering people and getting as many as possible of them into the workforce.
While continuing the work which begun with the Lisbon strategy, Europe 2020 is a streamlined and focused policy programme and backed by stronger governance. This time, we will also have the European Council to drive the strategy. This should ensure the political support for Europe 2020 and its implementation throughout Europe. It will of course be a challenge to mobilise the resources needed to reach the Europe 2020 objectives, given that we have to consolidate public finances at the same time.
2. What measures will the Commission take to deal with the larger issue of competitive divergences and macroeconomic imbalances within the euro area?
The crisis has proven that economic policy coordination can not be limited to fiscal matters, no matter how central they are. Other macroeconomic imbalances can also have serious consequences for individual countries and for the euro area as a whole.
In particular, weak competitiveness and current account deficits compound the detrimental effects of fiscal deficits. Without doubt, the most pressing and urgent need to take corrective measures is in the deficit countries that have lost their competitiveness.
But large and persistent current account surpluses may also be problematic. In the next few years, the necessary adjustment of the deficit countries is likely to act as a drag on growth. For that not to lead to an overall weakness of demand, the surplus countries should stimulate private demand. That cannot happen through fiscal stimulus, as also the countries with strong current accounts have fiscal deficits. Therefore, one should work to realise such structural reforms that can help increasing private demand.
It is self-evident that this can not and will not mean to weaken export performance of any surplus country. Instead, the aim is to improve both export competitiveness where needed and domestic demand where needed and possible.
Hence, I am not suggesting that Bayern München should play below its standard against Olympique Lyon, just to ensure an equal game. Rather, both should play better and improve their standard by making both offence and defence stronger, and ideally play as a European team, competitive at world level and strong domestically. This way can grow stronger as Europe.
3. What can be done to reinforce economic policy coordination? In your perception, how serious is the threat to confidence in the euro and euro area cohesiveness?
The Greek crisis has demonstrated the need for enhanced economic policy coordination in the euro area. This was already recognised in the Lisbon Treaty. We are preparing proposals for the implementation of its Article 136. My intention is that the Commission will present a Communication on reinforced economic governance in the euro-area in the course of this spring.
First and foremost, we need it to prevent unsustainable public deficits, and thus we need to be better able to monitor the mid-term budgetary policies of the euro-area member states. We need to be able to issue broader and more stringent recommendations to the member states to take credible corrective measures.
But we can also make a better use of existing instruments. The Council can address recommendations to a member state whose economic policies risk jeopardising the proper functioning of EMU. This has been used probably too rarely in the past.
Under Article 121 of the Lisbon Treaty, the Commission can issue similar early warnings directly to a member state. This is something we must do once needed to help member states to address emerging economic problems at a much earlier stage.
The latest economic developments, not least in Greece, and divergences in competitiveness, are a serious wake-up call for further actions by the EU in economic governance. A new broad consensus on collective actions to improve economic coordination and surveillance is emerging. We must seize this moment.
4. Based on your experience as Commissioner for Enlargement and in view of the divergent competitive positions of many new Member States, do you think that EU enlargement and expansion of the euro area can continue under a “business as usual” scenario?
Despite the recent economic crisis and deteriorating employment situations, the EU membership is still attractive. The EU is still able to provide stability and prosperity in the continent as well as an access to a single market of over 500 million consumers. The euro has also maintained its attractiveness.
We can and should continue to pursue deepening and widening in parallel. I do not see any contradiction between the two, if they are both done in a way that respects the rules and reinforces Europe.
5. Unemployment is still over 9% in Europe and the most recent economic data show a lacklustre recovery. When do you think Europe will fully enter economic recovery and how fast do you think the economy will recover? Is it really the right time to put in place exit strategies?
There are clear, albeit still fragile, signs of recovery. We are coming back from the deepest recession in the post-war period. Historically recessions triggered by financial crises tend to be more protracted.
But growth is taking root and we can expect also the employment situation to stabilise towards the end of the year. Assuming that this overall perspective does not change, it is appropriate to start withdrawing the stimulus measures at the latest in 2011 and in a number of countries already this year.
However, economic growth alone is not enough if the growth will not be able to create jobs and increase employment. That’s why we need the Europe 2020 strategy and investments in human capital and job creation.
6. Member States’ public finances have been battered by the recession and cost of bailouts and social welfare measures, and Europe’s ageing population will soon become an additional burden. How can we improve public finances in EU Member States and, realistically, how long will it take until they recover to their pre-crisis levels?
Before the economic crisis hit, public finances were going in the right direction. Deficits and debt levels were falling, and long-term sustainability was improving through the reform of pension systems in several countries. The crisis through us back by 20 years. We urgently need to return to fiscal prudence.
To achieve the required consolidation, restraining expenditures is necessary. In some cases also increasing taxes is feasible and necessary. In addition, we need structural policies that lift productivity growth and lead to significantly higher employment rates. Europe 2020 is about that.
The stability and convergence programmes and the excess deficit procedures will set exact time paths for deficit reductions for the coming years. Determined implementation is the key. Reducing debt levels will be much harder, as potential growth is not likely to be at the same level as in the past decades.
7. How will you work with other Directorates-General and EU and international institutions? Do you see them as having competing or complementary functions? What will be the impact of the Treaty of Lisbon on your work and on cooperation with other institutions?
In addition to the European Commission, I have experience from the European Parliament as an MEP, and from working in a national administration. This gives good basis and right appreciation for the work of all three institutions. They all have a key role to play for the benefit of Europe and its citizens.
In economic and monetary policy we have also other key interlocutors. The European Central Bank and our relation with it are crucial for the EU's economic and financial development. We have also close cooperation with and role in the European and international financial institutions such as the EBRD and the IMF. We need to build together stronger global economic governance.
In order to make successful economic policies in Europe, we need to start from home and develop close working relations between all DGs. We should join our forces to pursue our common goals.
8. What changes have you made to the ECFIN organisation and what changes are still in store? How will the changes impact economic policymaking in Europe?
The crisis already led to changes at DG ECFIN before my arrival: a new Directorate for Macrofinancial Stability was created, given the new prominence of financial sector issues. This reflects the situation in other European and international organisations too, and the ongoing development of a new EU-wide financial supervision architecture – most notably the proposed European Systemic Risk Board.
More recently, the DG has again responded to the latest developments by putting in place a special task force to monitor the situation in Greece. It works closely with the ECB and IMF.
We need this type of rapid, flexible responses in order to be able to react properly to crises and other changing circumstances.
9. What would you like your legacy as Commissioner for Economic and Monetary Affairs to be?
I know it by my own experience that any football team needs a meaningful division of labour, based on insightful leadership, individual excellence and smooth, seamless teamwork. To score, we need one or two striker, but also an astute playmaker and a smooth winger – not to speak of a competent defence. I would like to be remembered as the teamplayer who helped Europe enter a new era of better competitiveness, higher productivity and growing prosperity for current and future generations.