Mr President, ladies and gentlemen, the first of January 2002 will mark the start of a momentous chapter in the history of European integration, when twelve sovereign states exchange their national currencies for a common European currency. From that moment on, the people of those twelve Member States will use the same notes and the same coins. It seems appropriate to find a term to describe this new stage in the integration of national economies, a stage which is characterised by a common market and a common currency and which is surely unique in the economic history of the world. We propose the use of the term ‘European home market’ as a synonym for Euroland or the euro zone. This European home market already has a common monetary policy. Since European economic and monetary union came into being on 1 January 1999, this policy has been in the hands of the European Central Bank. Today, however, we are faced with the challenge of formulating appropriate common economic policies for the European home market. The Committee on Economic and Monetary Affairs agreed by a clear majority that these economic policies should be based on the principle of a socially committed market economy. The main instrument for the coordination of economic policies at European level is the procedure laid down in the Treaty for establishing the Broad Economic Policy Guidelines. The European Parliament has hitherto played a subordinate role in this procedure. I therefore believe it is absolutely essential to provide for a greater degree of participation by the European Parliament in future. Another flaw in the procedure is its lack of flexibility. Recommendations are made on the basis of predicted economic trends. If, however, current economic data diverge from the forecast values, these recommendations lose some of their validity. The Member States must therefore be given some leeway to respond quickly to unexpected changes in economic indicators. The Guidelines are not legally binding, but it is certainly accurate to speak of the political binding force of the Broad Economic Policy Guidelines. Although there is no disputing that defects must be corrected in everyone’s interest, a certain margin of discretion should exist here too. I believe there is a need, for example, when assessing a Member State’s economic policies, to consider the extent to which particular trends in that country will affect the euro zone as a whole. Economic growth in the European Union has slowed down since last year. The Commission has now revised its predicted growth rate of 3% and has lowered its expectations to 2.8%. Other observers expect even lower growth rates. On the basis of these forecasts, we consider a figure of between 2 and 2.5% for this year to be entirely realistic. In view of the general slowdown in the world economy, I believe it is crucial that the European Union should look to its own strengths. How profoundly the bleak global economic climate will affect us is largely in our own hands. Particularly in view of developments in the United States and Japan, responsibility for the world economy falls on the European Union, and we must shoulder that responsibility. What is the present state of play in the European Union? As far as inflation is concerned, current forecasts indicate that prices are set to rise by more than 2% in two consecutive years, thereby exceeding the bounds of price stability as defined by the European Central Bank itself. External factors, however, such as the increase in oil prices, are playing an important part in this development. In this difficult environment, the European Central Bank is doing an excellent job. But it must continue to do everything in its power to avoid squandering the reserves of trust that have been vested in it. That is why we welcome its steady-handed policy, which we encourage it to keep pursuing. At this point, however, I must cast doubt on the consistency of last week’s interest-rate cut with this approach. In the domain of budgetary policy, most Member States have managed in the course of the past year to achieve the balanced budget prescribed in the Stability and Growth Pact. This, however, has been done with the aid of the proceeds from the sale of licences for the operation of universal mobile telecommunications systems (UMTS) as well as low interest rates and the increased tax revenue generated by accelerated economic growth. Some of the Member States, however, have not capitalised sufficiently on these favourable economic conditions to reduce their public deficits and their national debt. In view of the changes in the ageing pattern of the European population and the strain these are likely to put on the pension system, it is crucial that sufficient financial room for manoeuvre be created. Full use must be made, for example, of the potential for spending cuts in every area. This should not undermine the role of public investment, but such investment must be made judiciously in pursuit of defined strategic aims and must not be made at the expense of priority private investment. Looking to our own strengths also involves continuing the structural reforms of the Member States’ capital products and labour markets. The Stockholm summit failed to reach agreement on a firm timetable for the liberalisation of the European gas and electricity markets. I very much regret that. Nevertheless, we should make every effort to secure the liberalisation of the remaining state monopolies. This is essential if we are to achieve our avowed aim of making the European Union the most competitive and dynamic economic area in the world by the year 2010. At the same time, it is imperative to push ahead with the completion of the internal market. I need cite only two major examples in this context: firstly, agreement must be reached at long last on the Community patent; secondly, Community rules on public procurement should be applied to defence procurement too, wherever their application is warranted. (Applause) Particularly at a time when the European Union is taking steps to establish a common defence policy, the ring-fencing of national defence markets is inefficient, anachronistic and quite simply too expensive. The introduction of the euro on 1 January will affect the entire population of the European home market. If we want it to benefit the people of Europe, we need an economic policy that accords with the principles of social justice and market economics. (Applause)

Political group: PPE-DE