布鲁盖尔-A-European-Exit-Strategy_8页_221kb

A European Exit Strategy Summary

Core Content

This policy brief outlines a structured and coordinated exit strategy for the European Union (EU) from the crisis mode of unsustainable budgetary, monetary, and financial sector policies. The strategy is designed to ensure a credible and effective transition to long-term economic stability while avoiding a relapse into recession.

Main Points

• Crisis Context: The EU has been operating in crisis mode with unprecedented budget deficits, driven by the financial crisis and subsequent emergency measures. The IMF projects a significant increase in the average debt-to-GDP ratio in the euro area, reaching 90% by 2014.

• Three Broad Objectives:

  1. Restoration of budgetary sustainability
  2. Macro stability with non-inflationary growth
  3. Financial stability, both current and future

• Sequence of Exit Steps:

  • First: Complete the identification, recapitalisation, and restructuring of ailing banks with a clear timetable for phasing out state support.
  • Second: Implement medium-term sustainability budgetary plans by summer 2010, with consolidation objectives and a debt target for 2014.
  • Third: Maintain a supportive monetary policy, with interest rates kept low and unconventional measures retained.
  • Fourth: Establish the European Systemic Risk Board (ESRB) by summer 2010 to oversee financial regulation.
  • Fifth: Set up a temporary, reinforced consultation mechanism for coordination between EU member states and central banks over 2.5 years, renewable once.

• Interdependence of Policies: The three core exit policies—budgetary consolidation, monetary tightening, and withdrawal of financial support—have both direct and indirect impacts. They are strategically interdependent, and simultaneous action could risk a double-dip recession.

• Complementary Policies: Bank recapitalisation, restructuring, and macroprudential oversight are essential to support the exit strategy and reduce risks to financial stability.

Key Information

• Budgetary Consolidation: Should begin in 2011 after the withdrawal of stimulus packages. The EU Stability and Growth Pact (SGP) needs to be adapted to support this process.

• Debt Projections: Even with a 0.5% annual consolidation rate, the EU27 debt-to-GDP ratio could still be at 100% in 2020. A higher consolidation rate may be needed to achieve a target of 75% by 2020.

• Potential Output: The crisis has caused a one-time loss in potential output, which affects the speed and effectiveness of consolidation. This loss varies between 0% and 5% of potential GDP.

• Institutional Support: The creation of independent Sustainability Councils at the national level is recommended to monitor and advise on public finances. These councils would help ensure credible and transparent budgetary commitments.

• Coordination: A temporary, reinforced consultation mechanism is proposed under Article 100 of the EU treaty to coordinate the exit strategy. This would facilitate both EU and global coordination, especially with the G20 and the US and China.

Policy Recommendations

1. Coordination Mechanism: Establish a temporary reinforced consultation mechanism for 2.5 years to coordinate the exit strategy across member states and central banks.
2. Bank Recapitalisation: Complete bank restructuring and recapitalisation in all EU countries by the end of 2014. Assessments should be based on net debt (debt minus bank capital held by the government).
3. Budgetary Plans: Member states should present medium-term budgetary plans by summer 2010, including debt targets and annual consolidation objectives.
4. Monetary Policy: Central banks should avoid premature tightening, as economic activity may still be weak. Interest rates should remain low, and unconventional monetary tools should be retained.
5. Macroprudential Oversight: Accelerate the creation of the ESRB and define a macroprudential policy framework to monitor and mitigate financial risks.
6. Stability and Growth Pact (SGP): The SGP should be used to enforce the European Sustainability Programme, with technical amendments to accommodate the post-crisis exit timeline.

Conclusion

The exit strategy must be carefully sequenced and coordinated to ensure that it is credible and effective. It should involve both fiscal and monetary adjustments, supported by strong institutional frameworks and clear timelines. The goal is to return to sustainable public finances, macroeconomic stability, and financial sector resilience, while avoiding the risk of economic relapse.