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In search of growth factors

Submitted by on 07 Jun 2011 – 12:52

Jan-Vincent Rostowski, Minister of Finance of the Republic of Poland

Comprehensive reforms of economic governance in the EU, which encompass several new mechanisms and institutions, are almost in place. They reflect the European Union’s well thought-out and coordinated response to the recent economic and financial crisis. While these measures need some time to produce results, we are still far from reaching full recovery. Moreover, fiscal challenges remain in many EU Member States.

In such circumstances enhancing economic governance in the EU will be the Presidency’s main priority in the area of economy and finance. We will facilitate the timely implementation of the measures that are currently being finalised by the Hungarian Presidency. These include the adoption of the legislative package (including in particular the amendments of the corrective and preventive arm of the Stability and Growth Pact, enforcement of budgetary surveillance and prevention and correction of macroeconomic imbalances).

This is an obvious must, but certainly not enough. We need to put much more stress on economic growth itself. If Europe is to be competitive on a global scale, it cannot simply limit itself to fiscal deficit and debt thresholds, but must aim at promoting faster growth in the medium and long-term.

We very much support the newly introduced European Semester, with the Annual Growth Survey adopted by the European Commission, which together mark the beginning of the first cycle of coordination of the Member States’ macro-economic, budgetary and structural reform policies. By the end of 2011, under the Polish Presidency, the first edition of the European Semester will be completed.

At the same time we should not forget about the EU budget and its impact on growth. Cohesion policy, which accounts for nearly half of the total EU budget, must continue to play its central role, so as to maximise the whole of Europe’s growth potential, as well as reducing the significant economic, social and territorial disparities that still exist between Europe’s regions. While focusing on the smooth and timely conclusion of the annual EU budget process the Polish Presidency will facilitate the opening of a discussion on the new multiannual financial framework, with possible changes to the cohesion policy and its interlinkages with the Europe 2020 strategy.

Our second priority will be enhancing the stability and security of the European financial markets. The Polish Presidency will support measures and proposals aimed at improving financial market regulation and oversight, and at developing a crisis management framework, which will help safeguard the financial sector against the negative effects of future crises. Special emphasis will be placed on the implementation of measures increasing the transparency of the financial sector and reducing systemic risks and excessive risk taking. This will include monitoring the recently established framework of macro- and micro-prudential oversight, in close collaboration with the European Systemic Risk Board and the newly set-up supervisory agencies. This European process will need to be coordinated with the work undertaken in other forums, especially the G20. The Polish Presidency will aim at efficient coordination of the common EU position to be presented at G20 meetings at the level of finance ministers and central bank presidents.

The Polish Presidency will continue to work on good governance, in particular as regards the taxation of savings incomes and will search for a compromise on new proposals by the European Commission concerning direct taxes, including a common corporate tax base. We will also try to find solutions in the area of taxation of the financial sector, and a new VAT strategy aimed at improving the functioning of the Single Market and increasing the effectiveness of the system of indirect taxes.

This will be the first occasion when Poland holds the rotating Presidency in the Council of the EU. We see this both as a privilege and a challenge. We will aim to play the role of an honest broker, a moderator and a leader, wherever appropriate. The perspective of exiting from the crisis and entering upon a path of solid growth is within our common reach, given a concerted effort by all EU Member States.