Building resilience must be a top priority for the euro area in 2019

Javier Doz Orrit

In 2019 it will be of the utmost importance for the euro area economies to build up economic and labour market resilience, taking into account the current economic outlook, says the EESC in its opinion on the Commission's 2019 economic policy recommendations for the euro area.

Building resilience is necessary to ensure that Member States are able to weather future shocks with limited economic and social costs  says EESC rapporteur Javier Doz Orrit . To this end the EMU must be deepened by completing the Banking Union, increasing the EU's own resources and establishing a macroeconomic stabilisation function for the euro area, as well as properly implementing the Social Pillar.

The EESC opinion also calls for effective measures to reduce excessive surpluses, significantly increasing public investment and wages in countries with surpluses. In the medium term, the growth of real wages should be in line with real productivity growth and inflation.

Urging Member States with a large public debt and negative or zero output gaps to build fiscal buffers by means of contractionary fiscal stances would not be advisable. This would be likely to perpetuate low growth in those countries, without helping reduce their public debt as a share of GDP.

The EESC also draws attention to the urgent need for guidelines and measures to encourage public investment and facilitate private investment. When applying the EU's fiscal rules the so-called Golden Rule should be considered.

Policy changes should not be carried out at the expense of revenue for financing social investment and social protection systems, or at the risk of lowering social and labour rights. Upward convergence in economic and social standards should be pursued in parallel.

Finally, the EESC urges Member States to show the necessary commitment to swiftly overcome the remaining disagreements on these issues. (jk)