10 years since the start of the crisis: back to recovery
The EU economy has been expanding for the fifth year in a row. Unemployment is at its lowest since 2008, banks are stronger, investment is picking up, and public finances are in better shape. Recent economic developments are encouraging, but a lot remains to be done to overcome the legacy of the crisis years. The European Commission is fully mobilised to deliver on its agenda for jobs, growth and social fairness.
The global financial crisis led to the European Union’s worst recession in its six-decade history. The crisis did not start in Europe but EU institutions and Member States needed to act to counter its impact.
Although the unemployment in the euro area is still too high, the results of the work accomplished by EU institutions and Member States are very encouraging for the future of the European Union. Economic growth, investments and interest rates are back to stable and positive levels.
Digging into the economic and monetary union
The EU has a complex structure of economic governance where supranational (such as the euro and monetary policy) and national layers (job markets, fiscal and social policies), and decisive action was needed to better coordinate and overcome major shocks. Progress has been made both in the aftermath of the crisis and during President Juncker’s Commission mandate, which started in November 2014.
As robust as it is today, the economic and monetary union remains incomplete and the journey of the euro has just started. From the Five Presidents’ Report in June 2015 to the reflection paper on the Deepening of the Economic and Monetary Union of May 2017, a lot of initiatives were taken in recent years to draw the lessons from the crisis and prepare the EU even better for future challenges.
Understanding the toolbox is not easy. Here [PDF] you can find a summary of measures and proposals taken in recent years. 10 key aspects:
1.The Treaty on Stability, Coordination and Governance in the Economic and Monetary Union (TSCG) containing the “Fiscal Compact” helped to ensure a closer supervision of national budgets and to pay greater attention to debt levels.
2.The Macroeconomic Imbalances Procedure was introduced to help detect and correct adverse economic developments before they materialise. The aim is to avoid that economic shocks have opposite consequences on different EU countries (e.g. with unemployment level).
3.The Single Rulebook aims to provide a single set of harmonised prudential financial rules which institutions throughout the EU must respect. This creates a safer financial sector for the single market and prevents contagion in case of financial markets turbulences.
4.The European Stability Mechanism (ESM) will be able to provide financial support for Member States that could no longer borrow on financial markets. This is the highest wall the EU could have built against financial crisis.
5.The European Semester, which is an annual framework for the coordination of economic policies across the European Union, was revamped by the current Commission. This is how it works.
6.The European Pillar of Social Rights could be created on the basis of concrete proposals made by the Commission. The aim is to speed convergence of social conditions of workers in the internal marker.
7.The Banking Union is being completed. The European Banking Authority has taken over the responsibility for the supervision and resolution of large and cross-border banks in the EU. The current Commission proposed a European Deposit Insurance Scheme to be gradually introduced by 2025. All bank deposits in the euro area will be 100% safe.
8.The Fiscal Union: in order to deliver both fiscal sustainability and fiscal stabilisation across the EU, the current Commission created European Fiscal Board that will support the evaluation of the implementation of EU fi scal rules.
9.The Investment Plan for Europe, also called the ‘Juncker Plan’, is set to trigger investments of more than €225 billion across all 28 Member States for European businesses.
10.The capital markets union (CMU) is another plan of the European Commission to mobilise capital in Europe. It will channel it to all companies, including SMEs, and infrastructure projects that need it to expand and create jobs.
Source: European Commission