Thursday 23 November 2017

Barroso hails Ireland but warns against complacency

Jose Manuel Barroso delivers his state of the union speech.
Jose Manuel Barroso delivers his state of the union speech.
Colm Kelpie

Colm Kelpie

IRELAND, Spain and Portugal were among the countries singled out as seeing economic improvements in European Commission President Jose Manuel Barroso's state of the union speech.

Mr Barroso declared that economic recovery was in sight after nearly four years of debt crisis and he urged governments to move faster to complete the continent's proposed banking union.

In his last state of the union speech before elections in May, Mr Barroso said that efforts had paid off and that the most vulnerable countries were now paying less to borrow.

"We see that the countries who are most vulnerable to the crisis and are now doing most to reform their economies, are starting to note positive results," he said in Strasbourg.

"Ireland has been able to draw money from capital markets since the summer of 2012, the economy is expected to grow for a third consecutive year in 2013 and Irish manufacturing companies are re-hiring staff."

It comes as stockbrokers Goodbody said Ireland had been the stand-out performer in the markets among the peripheral euro economies this week, with the 10-year yield remaining at about 4pc

Spanish 10-year-spreads have also fallen to below 2.5pc relative to Germany for the first time since June 2011, it said.

Mr Barroso said Greece had completed a "truly remarkable fiscal adjustment" and was regaining competiveness while growth in Portugal was picking up after many quarters in the red.

"What we can and must do first and foremost is deliver the banking union. It is the first and most urgent way to complete our union," he said.

His comments are a shot across the bow to Germany, which has tried to limit the scope of a single banking supervisor and halt the push for an EU-wide authority and fund for dealing with failed banks.

"Now is the time to rise above truly national interests and parochial values,"he said. "In this phase of the crisis, a government's job is to provide certainty and predictability that markets still lack.

"Over the last years we have seen that anything that casts doubt on a government's commitment to reform is instantly punished."

Efforts to implement the proposed banking union have stalled in the run-up to German elections later this month.

"Make no mistake, there is no way back to business as usual," Mr Barroso said.

"Some people believe that after this everything will go back to the way it was before. They are wrong. We will not go back to the 'old' normal, we have to shape a 'new' normal."

It was governments' fiscal mismanagement and financial market excesses – not EU policies – that caused the crisis, he said, decrying a tendency for successes to be "nationalised" and failures "Europeanised". Europe should not be cast as the enemy, he said.

He also urged leaders not to slacken in overhauling their economies and to introduce the structural reforms needed to put the eurozone and wider EU on a more stable footing.

"The recovery is within sight. This should push us to keep up our efforts," he said.

The biggest risk to a sustained recovery, he said, was political – a lack of commitment by leaders towards the goals agreed.

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