Brussels, 17/02/2014 (Agence Europe) - At a debate on the fringes of the Eurogroup meeting attended by Portuguese Finance Minister Maria Luis Albuquerque (Portugal), Michael Noonan (Ireland), Jeroen Dijsselbloem (the Netherlands) and Luis De Guindos (Spain) on Monday 17 February, the OECD unveiled a report on boosting the “weak and uneven” economic growth in the eurozone.
OECD Secretary General Angel Gurria said that lending would not recover if the banks did not establish sufficient liquidity buffers and, in this connection, there should be deep analysis during the upcoming assessments of banking in Europe. In a report setting out recommendations for the eurozone, the OECD says that the single resolution mechanism (SRM) should come on stream as soon as the bank assessments have been terminated and there must also be a credible resolution fund and a backstop. The OECD says that prevention is better than cure and therefore it is important to hive off high-risk banking. Noonan said the EU also needed “non-banking” lending.
Budget consolidation and perception. Gurria stressed the “brutal legacies of the crisis”, such as growing inequalities, a tragic loss of confidence and people's resistance to reforms. Communication is just as important as the contents of the measures, he said. Dijsselbloem talked about the reforms suffering from a bad image. He said he did not want to destroy the welfare state, but rather to update it so that it can survive. Reforms take time to produce visible outcomes, he added. Albuquerque said it was “difficult to keep the public with us”, pointing out in passing that Portugal had managed to overcome last summer's political tension. She said it was important to demonstrate that there are positive outcomes and to continue with the consolidation efforts: “We cannot run the risk of thinking that we've done what we needed to do and be lenient on fiscal discipline”, because, although the worst is past, much still remains to be done.
The OECD report recommends adjusting budget consolidation to stimulate growth and conclude the structural reforms aimed at boosting jobs. It says increasing the retirement age is important in Austria, Belgium, Finland and Slovenia, and reforming education and healthcare will hugely boost efficiency in nine member states without compromising on quality. It adds that reducing tax pressure could be beneficial for growth and social justice in Ireland and the Netherlands.
Gurria says the eurozone must boost productivity and competitiveness. The OECD says that, despite structural reforms, plenty remains to be done to ensure as a priority that cyclical unemployment does not become structural and also to deal with the social impact of the crisis. De Guindos stated that job creation is top of the OECD priority list. (EL/transl.fl)