Publication - The next steps to make the euro area more resilient - Speeche by Klaus Regling, ESM Managing Director
Ladies and gentlemen, - It is a laudable idea to discuss the biggest challenges that Europe is still facing. But we should be careful not to give the impression that Europe is in perpetual repair mode. On the contrary, the crisis is well behind us, and we have come out of it stronger than before.
It is important to say this publicly, because many people may still have their doubts about how we handled the crisis. The period has – understandably - damaged their trust in banks and in politicians. It has added to an erosion of trust in the elites that you see in almost all Western democracies. And as all of us on this panel are part of the establishment, it is worth asking: could we have done better?
Euroscepticism is one of the biggest risks in the eyes of the financial markets, because of this year’s elections in the Netherlands, France and Germany. Populist movements have sprung up throughout the world, bust mostly in Western countries. And I think that, yes, we could have done more to prevent this.
Firstly, income inequality has risen more than is healthy for a society in the past 25 years. The excess of greed at the top of our society is an important factor to explain the rise of populism. It is true that Europe is doing much better in terms of income equality than the United States. But the gap is widening in Europe too, and more can be done to compensate those who are falling behind in the race.
I already alluded to the second criticism, which is that we haven’t done enough to explain how well Europe has handled the crisis. The euro is now on a much more stable footing than before the crisis, and the euro area economy more resilient. The fact that not enough people are aware of that carries a risk. It means people may think that money has been wasted, without much improvement. It could also mean that many people do not trust Europe to deal with the next big challenges, such as immigration and security, global competition and climate change.
So let me address this communication issue and share my more optimistic view on Europe. After the crisis, countries did much-needed homework to restore competitiveness and reduce budget deficits. Macroeconomic imbalances have now largely disappeared.
page source https://www.esm.europa.eu/speeches-and-presentations/
