Please note that this does not constitute a formal record of the proceedings of the meeting. It is dependent on interpretation and acts as an unofficial summary of the debate.
On September 4 2014, the European Parliament’s Committee on Economic and Monetary Affairs held an exchange of views with Jeroen Dijsselbloem, President of the Eurogroup. A summary of the exchange of views can be found below.
Jeroen Dijsselbloem, President of the Eurogroup, began by saying that the start of a new legislature is a good time to take stock. The key Euro area policy recommendations were adopted in June and will now be implemented. The Eurogroup will discuss their implementation at each meeting. As regards to the economic situation, he noted that GDP has remained stable in the Euro area and increased by 0.7 percent. These figures hide different performances in different countries, with some performing strongly due to reforms delivering results. However, there was a loss of momentum in some of the Euro area’s largest countries. In Germany, the strength of growth in the first quarter can explain the loss of momentum. However, it is clear that the recovery remains very fragile and uneven. As such, the growth and reform agenda must be pushed forward with renewed vigor. Reducing public and private debt levels, improving competitiveness through structural reforms and improving the stability of the financial sector are all essential measures.
He welcomed the brave measures taken across the Euro area and noted that public finances are returning to a stable footing and the number of Euro area countries under an excessive deficit have been reduced. Private debt has also fallen. He then noted the need to restore sustainable growth and this means that the right policy mix needs to be found.
Improving competitiveness through structural reforms is essential he reiterated. Different reforms are required in the member states, but the Eurogroup wants to emphasize the collective benefits. The high tax wedge on labour is a problem across the Euro zone. This is preventing growth and new jobs. The Eurogroup will look at the plans to reduce the tax wedge next week and later in the Autumn. He stressed the need to use a system of peer review. This can help member states comply with the pacts.
Concerning the banking sector and ending financial markets fragmentation, he said that much progress has been made towards establishing a banking union. In two months, the ECB will assume full supervisory powers and this will contribute to breaking the links between banks and sovereigns. Ongoing preparations are crucial in this respect and the Eurogroup is following the stress test and asset quality review very carefully. He then said that the new rules on resolution also need to be enacted and noted that preparatory work is underway.
Moving on to the programme countries, he noted that Cyprus and Greece are the only two left. Cyprus is firmly on track and has made good progress on structural reforms and the bank reform programme. He warned however that much remains to be done. The Eurogroup will review the progress of Cyprus on September 12th 2014. As regards to Greece, he noted that it is now running a primary surplus and there are increasing signs of market confidence. However, the public debt levels remain far too high as is unemployment. The fourth review of the Greek programme was completed in August and the fifth review will take place in Autumn. Any decision on whether Greece will require another programme will be taken in light of the fifth review.
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