Economic and Financial Affairs

Conference on Stability, Economic Coordination and Governance in the European Union – Focus on Growth and the EMU by the fourth panel


Xavier Bettel et Pascal Saint-Amans at the TSCG conference on 10 November 2015
© Chambre des députés
Under the Luxembourg Presidency of the Council of the European Union, on 9 and 10 November 2015, in Luxembourg, the Chamber of Deputies held an Interparliamentary Conference on Stability, Economic Coordination and Governance in the European Union, as provided for by Article 13 of the Treaty on Stability, Coordination and Governance (TSCG). Growth and the economic and monetary union (EMU) were the focus of the conference's fourth panel.

Xavier Bettel, Luxembourg's Prime Minister, stressed the fact that growth "is not an aim in itself", but is intended to create jobs and reduce unemployment. In his view "the economy and social progress go together". "If the economy does well, social policy does well. If the economy is not good, it will be necessary to make some choices", continued Xavier Bettel. In the Prime Minister's view, growth must be inclusive and can only be sustainable if it has a social dimension.

As for the European Fund for Strategic Investments (EFSI), Xavier Bettel took the view that the policy should support any initiative that makes it possible to boost the economy. He emphasised the need for governments to invest, while sounding the alarm about the consequences of reducing investment in social policies. The Prime Minister welcomed the creation of the Juncker investment plan, which aims to mobilise 315 billion euros of investment over three years.

"In Europe", he continued, "we have a tendency to be very hesitant about private investment without any guarantees". Whereas in the United States an entrepreneur can fail and make a new start, in Europe he will be "branded as a loser", observed the Prime Minister, congratulating entrepreneurs who dare to take risks, and regretting the fact that this tendency to invest is not present in Europe.

Finally, the Prime Minister returned to the subject of transparency in relation to tax rulings, as requested by the European Commission. He called on all Member States to take part, and stressed the need for common rules, reminding those present that Luxembourg had removed banking secrecy.

The investment deficit and the need for inclusive growth

Pascal Saint-Amans, Director of the Centre for Tax Policy and Administration at the OECD (Organisation for Economic Cooperation and Development), reported that there was an "investment problem" in Europe, particularly relating to public investment, which is partly why the OECD has reduced its growth forecasts for the Eurozone (1.8 % for 2017, 1.9 % for 2018). The Eurozone "will do better" as a result of various factors such as the fall in oil prices, but "it is not doing well enough", summarised Pascal Saint-Amans.

The OECD Director then stressed the need for inclusive growth. "Growth by itself, without any impact on reducing inequalities, would be under-performance in social and economic terms, because inequalities jeopardise growth potential", he said. He also stressed the need for structural reform concerning education and redistribution, because "we have reached levels of inequality that require firm and immediate action". The OECD's role at the G20 consists of identifying within national strategies the measures that are likely to reduce inequality and promote more inclusive growth.

Pascal Saint-Amans then returned to the OECD's BEPS initiative (combating Base Erosion and Profit Shifting), adopted by the G20 finance ministers on 8 October 2015. "If we want to achieve a completely healthy environment, we must put an end to damaging fiscal competition, which used to be accepted by everyone, but for which there is no longer any tolerability", said the OECD Director. "The rules of the game must be the same for all, creating a level playing field", he urged.

Pascal Saint-Amans stressed the key role played by Europe in promoting the digitisation of the economy and countries' tax systems, and in "preventing Europe from becoming a lawless area, and specifically in the tax field". The expert believed that multinational companies had to pay their share of company tax. "We cannot have taxes on individuals if we do not have taxes on companies", he added.

Finally, the OECD Director thanked Luxembourg for having supported the BEPS project in a determined manner. "Without your support, this project would not have been possible", said Pascal Saint-Amans. With regard to combating banking secrecy, and the exchange of information, he welcomed the "major progress" made by Luxembourg, which has been "recognised by the international community as a whole".

Projects approved by the European Investment Bank (EIB) which are expected to generate investment of 37 billion euros

Ambroise Fayolle, Vice-President of the EIB and head of the European Fund for Strategic Investments (EFSI), presented the first report on projects approved by the EIB under EFSI.

Some of these are projects in the area of infrastructure and innovation (managed by the European Investment Bank), and some of them relate to small and medium-sized enterprises (SMEs) (managed by the EIB and the European Investment Fund).

On the first set of projects, Ambroise Fayolle referred to 27 operations which "have the right qualities to be given a European guarantee". These operations come from 13 countries, cover eight sectors and are expected to generate investments of 20 billion euros (for a loan amount of 4 billion euros). In relation to SMEs, the projects approved with loans of 2 billion euros should generate 17 billion euros of investment, according to the EFSI Director.

Outi Slotboom, Head of Unit at the Policy, Strategy and Coordination Directorate in the Directorate-General for Economic and Financial Affairs at the European Commission, said that Europe was "emerging from the crisis". According to her, the EU is at the starting point for deepening the EMU. The European official welcomed the "first signs" of a recovery in growth. "If a Member State has problems now, people no longer cast doubt upon the stability of the Eurozone', she said.

  • Updated 11-11-2015