Commission guide: The EU is on the road to economic recovery, says Dombrovskis

Despite recent Economic hardships, reforms by European governments have put the EU back on track for growth and employment, says Valdis Dombrovskis.

By Julie Levy-Abegnoli

18 Feb 2015

European commissioner for the euro and social dialogue Valdis Dombrovskis is aware that he is stepping into his role at a difficult time. "Europe stands at a critical juncture", he says, however, the Latvian official appears confident, stressing, "the most acute phase of the crisis is behind us for now. All

EU economies are expected to grow this year. Unemployment is starting to decline. The recovery has begun, but is fragile, slow and uneven". 

Still, he remains convinced that "the right conditions are in place for sustained economic growth and job creation".

During his mandate, the Latvian official will focus on "steering work to better streamline and reinforce the European semester in a way that increases its effectiveness and ownership, within existing rules". This will require close cooperation with other members of the college of commissioners, as well as parliament and the council. 

"To support short-term economic dynamics and strengthen growth fundamentals in the long-term, the EU is acting on three fronts - investment, structural reforms and fiscal responsibility, with a focus both on supply and demand"

Dombrovskis is also "moving forward the reform of our economic and monetary union (EMU) - it is essential that we preserve the stability of our single currency and enhance the convergence of economic, fiscal and labour markets policies between the member states that share the single currency".

 He describes the country specific recommendations as "the centrepiece of the European semester" and "a key policy benchmark in many member states", and says he is pleased that "implementation of these measures has started to bear fruit, in particular, there has been tangible progress in sustaining macro-economic stability and fiscal responsibility".

While the goal of the measures the commissioner is working on is to boost economic growth and employment, he stresses that they must, above all, be "solid and socially legitimate". 

For the former MEP, "the stability of the single currency and macroeconomic governance have to go hand-in-hand with social fairness and inclusion". 

Furthermore, "following the difficult policy choices governments have had to make since the crisis, the effects of reforms are emerging - we have to ensure that this translates into money in people’s pockets, so that people feel the recovery".

Dombrovskis looks forward to working closely with MEPs, saying, "any initiatives under my watch would lack any democratic legitimacy without close coordination and cooperation with the European parliament". 

He highlights that it is "the representative of the union’s citizens and therefore an essential source of legitimacy - the commission is accountable to the European parliament and depends on its political support".

Commenting on the current economic climate, the commissioner says that "real exchange rate developments and low commodity prices should serve as an economic stimulus". 

And although "Europe’s current account balance has improved", he warns that "some member states, particularly on the periphery, would need to post still higher current account surpluses and sustain them for longer in order to reduce their external debts". 

He adds that "the heavy pulling in terms of fiscal consolidation is behind us - the overall fiscal stance is now broadly neutral.

"The right conditions are in place for sustained economic growth and job creation"

The number of countries in the excessive deficit procedure has decreased from 23 out of 27 member states in 2011, to 11 out of 28 today". Furthermore, Dombrovskis is pleased that "many member states have introduced far-reaching structural reforms to make their economies more competitive - [those] that underwent important reforms now experience fastest growth".

Dombrovskis also points out that "to support short-term economic dynamics and strengthen growth fundamentals in the long-term, the EU is acting on three fronts - investment, structural reforms and fiscal responsibility, with a focus both on supply and demand". This, he says, is in line with the commission’s €315bn investment plan.

Regarding Greece, he insists that its economy is "at a turning point" and that it has "made remarkable progress in reforming its economy with the help of its European partners.

The country has been returning to growth, and employment has been picking up. It is important to build on these achievements. We stand ready to continue assisting Greece in addressing its remaining reform challenges".

Moreover, the Latvian official promises that he has "taken note of the parliament’s numerous calls for a unified external representation of the euro area". 

He intends to follow up on the commission’s blueprint for a deep and genuine EMU, which was published in 2012, in order to "set out a number of priority actions for the strengthening and consolidation of the external economic representation of the euro area in the international monetary fund". 

This is essential, considering that "as the crisis has shown, it is of utmost importance for the euro area to speak with one voice on the global stage".

Valdis Dombrovskis is European commission vice-president for the euro and social dialogue

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