União Monetária precisa de um orçamento reforçado, senão não pode funcionar

EP plenary speech – Debate on Economic and Monetary Union/Euro area recommendation with Jean-Claude Juncker, president of the European Commission, and Jeroen Dijsselbloem, president of the Eurogroup – 15/12/2015

This is indeed a very important debate with 3 presidents that co-signed the 5 presidents report, and we are for the first time discussing in plenary the stance and the functioning of the Eurozone.

So this is really a very welcome moment.

And the truth is that more than 7 years after the 2008 crisis, in spite of the - welcome - massive quantitative easing by the European Central Bank, and in spite also of a more intelligent application of the governance rules by the Commission, the Eurozone economy is stagnant, is basically flat, with strong internal divergences and alarming levels of poverty and unemployment.

And the reality confirms what we have repeatedly been saying here and what Mario Draghi said already in 2014: in a recessive economic environment, monetary policy alone is not enough to boost the economy. In a zero lower bound interest rate and stagnant economy, investment projects are hardly viable, thus limiting the potential to increase competitiveness and create new jobs, while non-performing loans jeopardise the viability of banks and other lenders.

So please Commission and Council you need urgently to acknowledge that the policies imposed until now need urgent change. In 2015 the GDP per head and the level of productive investment in the Euro Area remain below the level of 2007.

The future of the EU and in particular the future of the Euro Zone and  its acceptance by its citizens depends on this policy change and change means that the Eurozone cannot, in 2016, pursue a "neutral aggregate fiscal stance" as, once again, is proposed by the Commission and the Council. It is suicidal to ignore the facts and persist in this neutral stance.

The aggregate fiscal stance should instead be expansionist, clearly countercyclical, should protect productive investment and limit the internal divergent trends. But what instruments do we have? Until now, only pre-crisis external deficit countries have adjusted, whereas external surplus countries continued to increase their current account surpluses. The surplus largely reflects excessive domestic savings over investment which leaves the Euro Zone without a stimulus.

This asymmetric adjustment, incapable of generating internal investment or consumption, is further reducing the viability of the common currency.

Apart from interpreting again in a more wise way  the existing rules, we need to immediately prepare for the next phase of the 2015 5 presidents report which is already a diluted version from the 2012 Van Rompuy report, but we need to prepare immediately for the establishment of the conditions to create a fiscal capacity for the Eurozone.

Without a reinforced budget, the monetary union cannot function.

European institutions also need to respect and comply with all the promises made in banking union in particular, by urgently providing the indispensable permanent credible backstop to the Single Resolution Mechanism, by accelerating the Common Guarantee of Deposits and by allowing the ESM to directly recapitalise banks, and I recall that this element is included in the first phase of the 5 presidents report.

I finish, but I think this cannot be a trade-off for anything else, it’s just to finish what has been promised and this is essential for mutual trust and the belief of the citizens.