« Do nothing in haste, look well to each step, and from the beginning think what may be the end. » (Edward Whymper, 1840-1911, legendary English mountaineer)
Over the summer, a potential turning point in the EU economy has been in the making, though still fragile. Add today’s quarterly GDP figures to other recent positive survey data and you will find reasonable evidence suggesting the European economy is gradually gaining momentum. I am referring to the indicators of economic sentiment and of industrial orders and output, and to some tentative signs that the downward trend in employment is starting to reverse. Stock markets are also performing well, and bond yields of so-called peripheral euro area countries are slowly but consistently coming down, providing for more financial stability in these stressed economies.
All in all, both soft and hard data over recent weeks support the European Commission’s spring forecast and its projections for a subdued, mild recovery in the second half of 2013. For next year, our projections show the recovery should be on a more solid footing, as long as we can continue to avoid new political crises and detrimental market turbulence.
The data also supports, in my view, the fundamentals of our crisis response: a policy mix where building a stability culture and pursuing structural reforms supportive of growth and jobs go hand in hand. To work, this policy mix needs the basis of our economy to be stronger: that is why we are cleaning up the mess in the financial industry and putting in place new rules for a sounder financial sector in the future, as well as reinforcing economic governance at both national and European level. And there is no doubt that the decisive policy action of the European Central Bank has had a decisive impact by supporting the short-term stabilisation of financial and bond markets.
Furthermore, all countries under programmes are putting their houses in order. They are doing so with determination, often with painful efforts from their citizens, and with the unwavering solidarity of their European partners.
Yes, this slightly more positive data is welcome – but there is no room for any complacency whatsoever. I hope there will be no premature, self-congratulatory statements suggesting “the crisis is over”. For we all know that there are still substantial obstacles to overcome: the growth figures remain low and the tentative signs of growth are still fragile; the averages hide important differences between Member States, as a number of Member States including Spain and Greece still have unacceptably high unemployment rates, especially for young people, which has created real risks of a lost generation; the implementation of essential but difficult reforms across the EU, in countries both under programmes and other Member States, is still in its early stages … So there is still a very long way to go before we reach our ultimate goal of a sustainable growth model that delivers more jobs.
I call on European policy-makers, as well as social partners and business leaders, academics and commentators, to seize this opportunity. A sustained recovery is now within reach, but only if we persevere on all fronts of our crisis response: keep up the pace of economic reform, regain control over our mountain of debt, both public and private, and build the pillars of a genuine economic and monetary union with no loopholes where irresponsible bankers or short-sighted policy makers can thrive.
So let’s all keep in mind Whymper’s wise words: we should look to the next steps in this steep ascent which is still ahead of us, in order to fully exit the crisis, and not lose sight of our goal. It is within reach, if we stay the course.