Schäuble: There is no Alternative between Reducing Public Debt and Boosting Growth and Spain is the Example

30/06/2014

    _ De Guindos: "Spanish economy has achieved four quarters of positive growth, increasingly intense".

    _ Schäuble: "We can only lay the foundations for growth by continuing along the path of structural reforms"

    _ “We need to insist on innovation, research and development, on structural reforms and on improving framework conditions.”

    _ “The upward trend proves that the path undertaken is the correct one”

    _ “It is our duty to do our best for young people to take advantage of the European model and in order to do so it is important not to relinquish it to populists and nationalists”

The Federal Finance Minister of Germany, Wolfgang Schäuble, stated that “there is no alternative between reducing public debt and boosting growth” and “Spain has been an example of this throughout the last two years”. Schäuble addressed the opening session of the Economy course of the 2014 FAES Campus together with the Spanish Minister of Economy and Competiveness, Luis de Guindos, who stated that “today Spanish economy is at a recovery phase” and “has achieved four quarters of positive growth, increasingly intense”.

Both Ministers addressed the challenges caused by the economic and employment situation in Europe and Spain. In this respect, De Guindos assured that “today Spanish economy is at a recovery phase” and “has achieved four quarters of positive growth, increasingly intense”. “According to the indicators mentioned above,-he specified-in the second quarter of the current year growth continued to boost, compared to the first quarter”.

In Schäuble’s opinion “there is no alternative between reducing public debt and boosting the growth. These are the both sides of the coin and we can only lay the foundations for growth by continuing along the path of structural reforms”. “Spain-he stated-has been an example of this throughout the last two years”. Regarding the labour reform of 2012, he explained that employment figures are always the last to improve. “It takes a lot of time for economic recovery to translate into an improvement of employment, but the upward trend proves that the path undertaken is the correct one and that we have to be patient”.

“Growth and sustainable employment are the two great global challenges”, Schäuble said, and specified that “in Europe we have to enhance possibilities for youth employment so as to avoid leaving a whole generation aside of development”. “It is our duty-he stated-to do our best for young people to take advantage of the European model and in order to do so it is important not to relinquish it to populists and nationalists”.

NEW CHALLENGES

“As a result of globalisation, challenges have changed”, Schäuble stated, and this has “affected the labour market” since, on the one hand, “technological changes have implied the structural destruction of a wide range of jobs” and, on the other, “labour supply is completely new and forces Europe to compete”.

“This is something that we need to understand in Europe, since bearing it in mind is the only way to do better in the labour market”. Thus, “we need to insist on innovation, research and development, on structural reforms and on improving framework conditions. This is the only path to success and the more convinced we are of continuing down this road the more successful we will be”, he stated. In this respect, Schäuble recalled that “the years when I worked with Luis de Guindos the most, Spain had already overcame a number of challenges with success”.

“We need to make people understand the profound meaning of reforms, and these cannot be understood without achieving the consensus of all social partners, which is essential for reforms to be successful”. Schäuble gave the example of his own experience by stressing the German dual training system.

He also stated that “even if the State cannot create growth by itself, it can create the framework conditions, such as legal certainty and the guarantee of property rights, since that is what national and international investors need in order to trust us”. “In Germany, we got slightly ahead in implementing measures against the crisis by adopting structural reforms and a sustainable tax policy”, he recalled.

Schäuble also went over other pending tasks within Europe, such as the consolidation of the European internal market “in order to get rid of some of its burdens”; negotiations to progress in the new transatlantic alliance between Europe and the United States, of which, “despite all the difficulties, we must not lose sight, it is necessity”; advance in transparency and fiscal justice measures, “essential, since opaque systems act as a disincentive to investors”; and the energy and digital union.

He particularly referred to a banking union, the aim of which is “to get banks financing real economy again”. “We need to keep in mind the future of SMEs; their financing and the provision of start-ups with risk capital constitute an essential measure”, he stated. According to the German Minister, all these are “aspects that we need to bear in mind if we want to build the future Europe and the ones that will help Europe to continue playing a leading role”.