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Commissioner Rehn on Europe’s Economic Agenda: Restoring Confidence, Fostering Growth

Speaking at the Peterson Institute for International Economics in Washington, DC, today, EU Economic and Monetary Affairs Commissioner Olli Rehn stressed that “the immediate challenge is to stabilize the situation in Greece” and that the “European Union is not going to abandon Greece. An uncontrolled default or exit of Greece from the euro zone would cause enormous economic and social damage, not only to Greece but to the European Union as a whole, and have serious spillovers to the world economy. We will not let this happen.”

He said: “Crisis management in the European Union may have given the impression of a rather belated, piece-meal and not well communicated affair. I cannot deny that the decision-making process of 27 member states and 27 different election cycles is a complex structure. Still, I would argue that what we have achieved in managing the current crisis is significant, though by no means enough.”

Commissioner Rehn stressed that it is necessary to put a stop to the accumulation of public debt, as stimulus measures in both the EU and the US were designed to be temporary. “What is the right fiscal policy response to the slowdown? The EU position is clear. The slowdown is no excuse to stop putting our fiscal houses in order. That is necessary to restore confidence.” He also pointed out that “in some countries there is simply no room for maneuver: the sovereigns either do not have access to market financing or it is becoming prohibitively expensive.”