Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee, the Committee of the Regions and the European Central Bank - Annual Statement on the Euro Area 2009 {SEC(2009) 1313}
Date: 2009-10-07
Institutions: European Commission
Subjects: economic growth, economic policy, economic recession, economic situation, euro area, monetary crisis

EN 

EN 

   EN 

 
 
COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 7.10.2009 
COM(2009) 527 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE, THE COMMITTEE OF THE REGIONS AND 
THE EUROPEAN CENTRAL BANK 

Annual Statement on the Euro Area 2009 

{SEC(2009) 1313} 

EN 

   EN 

 
 
 
  
1. 

THE EURO AREA ECONOMY IN 2009 

In  the  wake  of  the  shockwaves  of  the  worst  crisis  since  the  30s,  signs  of  economic 
stabilisation  are  emerging.  Throughout  the  world,  important  policy  interventions  have 
succeeded in achieving a degree of stability in the financial system. Financial conditions have 
improved  over  the  summer,  with  several  financial  indicators  returning  to  pre-crisis  levels. 
Business  and  consumer  confidence  indicators  also  have  improved  in  recent  months.  World 
trade has stabilised, and there are indications that the destocking cycle is bottoming out. The 
relative resilience of consumption has proved to be a stabilising factor during the recession, as 
disinflation  and  relief  measures  included  in  fiscal  stimulus  packages  have  supported 
household incomes. 

According to the latest interim forecast published by the Commission services in September 
2009, growth in the euro area is set to fall by 4% in 2009, unchanged from the Spring 2009 
forecast.  The  stronger  than  expected  contraction  in  activity  in  the  first  quarter  was 
compensated  for  by  a  faster  than  projected  stabilisation  in  the  second  quarter,  especially  in 
Germany and France. 

However, the strength and resilience of the recovery has yet to be fully tested. While banks 
are in the process of strengthening their solvency ratios, helped by the accommodative stance 
of monetary policy and rescue packages, the stabilisation in financial markets has yet to yield 
concrete outcomes for credit distribution to the economy, which has decelerated considerably 
throughout the first half  of  2009.  Deteriorating employment prospects are another source of 
uncertainty  and  concern.  On  the  positive  side,  the  considerable  amount  of  policy-induced 
stimulus that is still in the pipeline should not be overlooked. Overall, the sustainability of the 
recovery is yet to be tested. 

The euro has acted as a valuable shield in the crisis. The euro has efficiently shielded the 
euro area from the exchange rate and interest rate turbulence that had proved so damaging for 
Member States in episodes of financial market stress in the past. It has also played a valuable 
role as an anchor of sound macroeconomic policies for Member States actively pursuing the 
adoption of the euro, or whose currencies are linked to the euro. Finally, the capability of the 
euro  area  to  act  swiftly  in  co-ordination  with  other  central  banks  has  contributed  to  the 
stability of the entire international monetary system. 

The financial crisis has increased the attractiveness of the euro for non-euro area Member 
States.  In  particular,  two  potential benefits  of  euro  membership  have  come  to  the  forefront: 
first,  it  would  eliminate  the  risk  of  sudden  and  disruptive  exchange  rate  movements;  and, 
second, it would grant domestic institutions access to euro central bank liquidity. At the same 
time, however, the crisis has shown that the euro does not solve all economic challenges - in 
particular challenges related to internal and external imbalances, as demonstrated by the fact 
that some euro area countries with imbalances have been hard hit. This experience confirms 
the rationale for achieving a high level of sustainable convergence prior to euro adoption, as 
required by the Treaty. Euro-candidate countries should equip their respective economies for 
life  in  the  euro  by  means  of  policies  to  strengthen  fiscal  discipline,  prevent  macro-financial 
imbalances, and foster productivity, competitiveness and ultimately their adjustment capacity 
within EMU. 

But the crisis is amplifying some challenges in the euro area. The crisis is weighing on the 
sustainability  of  public  finances  and  potential  growth.  Furthermore,  while  the  adjustment 

EN 

2 

   EN 

 
induced by the crisis is helping to reduce some imbalances within the euro area, there is a risk 
that  divergences  in  competitiveness  positions  will  increase  again  if  policy  action  is  not 
appropriately co-ordinated. 

As  a  consequence  of  the  steep  fall  in  revenues,  fiscal  stimulus  measures  under  the 
European  Economic  Recovery  Plan  (EERP)  and  the  operation  of  automatic  stabilisers, 
government  balances  have  deteriorated  sharply.  Thanks  to  effective  policy  action  since 
autumn 2008, coordinated in the context of the EERP, a financial meltdown and a generalised 
loss  of  confidence  has  been  avoided.  Fiscal  policymaking  has  been  successfully  targeted  to 
the  need  and  urgency  of  pulling  the  economy  out  of  the  recession.  Discretionary  fiscal 
stimulus  and  unfettered  automatic  stabilisers  have  provided  a  cushion  to  economic  activity 
and contributed to the recent signs of improvement, but have led to a substantial deterioration 
in  government  accounts.  Rising  budget  deficits  and  low  or  negative  growth,  as  well  as  the 
support  being  given  to  the  banking  sector,  are  feeding  into  significantly  higher  public  debt 
levels. The average euro area budget deficit is now expected to increase from 2% of GDP in 
2008 to over 5% of GDP in 2009. On the basis of current plans and projections, the euro area 
deficit will further increase to 6½% of GDP in 2010, while public debt could reach 84% of 
GDP by 2010, i.e. an increase of 18 percentage points from 2007. In 2009, with the possible 
exceptions of Cyprus and Luxembourg, almost all euro area Member States will post budget 
deficit ratios above the 3%-of-GDP threshold, with some countries exceeding the benchmark 
by  a  large  margin.  In  the  first  half  of  2009  and  on  the  initiative  of  the  Commission,  the 
Council opened Excessive Deficit Procedures (EDPs) for Greece, Ireland, France, Malta and 
Spain on the basis of a breach of the reference value in 2008 (2007 for EL)1. The Commission 
proposes  today  that  the  Council  open  EDPs  for  countries  which  are  expected  to  breach  the 
reference value in 2009. The flexible application of the Excessive Deficit Procedure permitted 
under the Pact provides important support and direction for Member States in these difficult 
circumstances. As a result, budgetary consolidation paths recommended under the EDPs have 
been largely set in a medium-term perspective and, depending on circumstances of individual 
countries, longer deadlines have been recommended for correction of the excessive deficits. 

The  crisis  may  accelerate  downward  pressures  on  trend  growth.  The  Commission  had 
projected  that  potential  GDP  growth  in  the  euro  area  would  fall  in  the  long  run  due  to  the 
ageing  population.  A  number  of  crisis-related  factors  may  amplify  this  phenomenon.  First, 
unemployment, if protracted, would entail a prolonged, perhaps permanent, loss of valuable 
skills.  Second,  the  stock  of  equipment  and  infrastructure  will  decrease  and  may  become 
obsolete  due  to  lower  investment  and  sectoral  change.  Third,  innovation  may  well  be 
hampered  as  research  and  development  spending  are  usually  among  the  first  outlays  that 
businesses cut during a recession. Higher risk premia may make the financing of R&D more 
expensive  in  the  future.  The  loss  in  potential  growth  is  expected  to  be  higher  in  countries 
experiencing deep recessions. 

The reduction of divergences within the euro area in the immediate aftermath of the crisis 
is welcome. In the immediate wake of the financial crisis, growth took a dive in all euro area 
countries, but to differentiated extent.  The Commission services interim forecast  shows that 
growth trajectories are beginning to fan out within the euro area. For example, growth in 2009 
has been revised upwards for Germany and France, while Italy and Spain recorded downward 
revisions. As for divergences in current accounts, the ongoing housing market correction and 

1 

All the relevant documents regarding the EDP procedure are available at: 
http://ec.europa.eu/economy_finance/netstartsearch/pdfsearch/pdf.cfm?mode=_m2 

EN 

3 

   EN 

 
                                                 
its  impact  on  domestic  demand  is  likely  to  go  some  way  towards  reducing  disparities,  a 
welcome step towards more balanced growth patterns. However, the convergence is moderate 
and is not consistent among the euro area Member States. 

2. 

IMBALANCES  ACCUMULATED  IN  THE  PAST  RENDERED  SOME  EURO  AREA  MEMBER 
STATES MORE VULNERABLE WHEN CRISIS STRUCK 

The crisis shone a spotlight on some pre-crisis imbalances. At a global level, the speed and 
intensity  of  the  contagion  from  the  Lehman  Brothers  bankruptcy  came  as  a  surprise.  The 
collapse  in  demand  and  GDP  in  some  euro  area  Member  States  has  been  just  as  deep  as  in 
other,  potentially  more  exposed,  economies.  While  the  global,  interconnected  nature  of  the 
banking and financial system largely accounts for the contagion, the difficulties experienced 
by  some  Member  States  have  underscored  a  number  of  vulnerabilities  within  the  euro  area 
itself. 

Accumulated  intra-euro  area  imbalances  exposed  some  economies,  more  than  others,  to 
shocks.  Benign  macroeconomic  conditions  characterised  by  strong  macroeconomic  growth, 
low rates of inflation, compressed interest rates and low levels of financial market volatility 
led  economic  agents  to  greatly  underestimate  some  of  the  risks  inherent  in  the  financial 
system at the global level and facilitated the expansion of credit worldwide. In some euro area 
Member  States,  the  same  benign  economic  environment  also  allowed  the  financing  of  fast 
growth at the expense of the accumulation of large current account deficits (primarily EL, ES, 
PT  and  CY,  but  also  IE,  MT,  SI,  SK),  while  other  Member  States  ran  ever-higher  current 
account  surpluses  (DE,  LU,  AT,  NL,  FI).  Within  the  euro  area,  the  dispersion  of  current 
account  balances  between  these  two  groups  had  steadily  increased  since  the  mid-1990s  and 
reached  an  all-time  high  just  before  the  crisis.  From  a  balanced  position  in  1999,  surpluses 
steadily accumulated and reached 7.7% of GDP in 2007, while aggregated deficits rose from 
3.5% of GDP in 1999 to 9.7% in 2007. 

In countries in deficit, the divergence trend reflected the build-up of domestic imbalances. 
They materialised through excessive domestic demand pressures, a surge in house prices and 
a bloated construction sector. This was especially patent in Ireland, Spain and Greece, which 
consistently  recorded  higher  growth  and  inflation  than  the  rest  of  the  euro  area  during  the 
decade. High current account deficits – and associated foreign capital inflows – are warranted 
in a catching-up scenario insofar as they enable an economy to increase its capital stock and 
prepare the ground for sustainable medium-term growth prospects. However, capital has not 
always  been  channelled  to  its  most  productive  uses  in  deficit  countries.  As  a  result,  a 
significant  share  of  the  labour  force  was  attracted  to  high  cyclical  sectors,  such  as 
construction, which now requires substantial adjustment. 

Conversely,  countries  in  surplus  capitalised  on  their  traditional  strengths,  with  a  growth 
model  centred  on  their  already-competitive  export  sector.  In  these  countries  the  engine  of 
domestic  demand  never  really  kicked  in  to  take  over  the  export  engine.  The  impact  of  the 
crisis revealed the vulnerability of this growth model to fluctuations in global demand, with 
implications for growth in the euro area as a whole. 

Another  source  of  imbalances  lay  in  the  rapid  growth  of  the  financial  sector.  Ireland  has 
been a textbook case, as the share of the financial sector in total value-added made up 10.6% 
in 2007, compared with only 5% on average in the euro area. Following the crisis, ballooning 

EN 

4 

   EN 

 
impaired assets weakened the banking sector and put public authorities, acting as the lender of 
last resort, under pressure. 

Such  imbalances  explain  why  the  crisis  has  hit  some  Member  States  harder  than  others. 
Since  the  large  external  liabilities  increased  exposure  to  financial  shocks,  deficit  countries 
suffered  from  reduced  risk-appetite  on  financial  markets.  The  adjustment  of  bloated 
construction  sectors  has  also  weighed  heavily  on  growth  and  employment  from  the  very 
beginning of the crisis. In parallel, countries in surplus were hit almost immediately by the fall 
in global demand and saw growth drop sharply. Countries with larger banking sectors are at 
risk  of  incurring  significant  fiscal  liabilities.  Overall,  Member  States  pursuing  unbalanced 
growth models have suffered particularly severe economic contractions. 

The impact of the crisis demonstrates the need for action. While these imbalances and their 
associated risks had been identified for several years, their resolution has been long overdue 
as policymakers in Member States largely ignored these imbalances in good economic times. 
They should not be ignored any longer. 

3. 

UNFINISHED  BUSINESS  ALSO  HAMPERED  THE  EURO  AREA'S  CAPACITY  TO  RESPOND 
TO THE CRISIS 

Deeper financial integration in the euro area was not matched by a parallel strengthening 
of supervisory arrangements. Existing supervisory arrangements failed to promote a common 
supervisory  culture,  to  apprehend  the  systemic  linkages  between  financial  markets  and  the 
real  economy  and  to  provide  a  resilient  framework  for  a  speedy  and  co-ordinated  response 
when  the  crisis  started.  Initial  responses  were  disjointed  and  largely  shaped  by  domestic 
considerations. For instance, initiatives on deposit guarantee schemes and the emergency de-
consolidation  of  a  large  cross-border  financial  institution  paid  testimony  to  the  absence  of 
workable crisis management procedures. The first Eurogroup summit at the level of Heads of 
State and Government, held in Paris in October 2008, helped to catalyse the EU response. 

The Commission has acted effectively to fill this gap. It provided a common framework for 
the implementation of national banking rescue plans, in line with state aid rules, benefitting 
also  from  ECB  support.  Since  then,  following  the  conclusions  of  the  Larosière  Group,  the 
Commission  has  presented  its  formal  legal  proposals  for  a  new  European  financial 
supervision  architecture.  The  proposals  aim  to  strengthen  the  prudential  oversight  of  both 
individual financial institutions and the financial system as a whole. In parallel, the EU is at 
the  forefront  of  the  regulatory  reform  of  financial  markets,  shaping  the  initiatives  and 
commitments of the G20. 

While the fiscal house was mostly in order when the crisis struck, some Member States had 
limited  room  to  respond  to  the  crisis.  After  several  years  of  broadly  successful  fiscal 
consolidation  in  line  with  the  recommendations  of  the  Stability  and  Growth  Pact,  most 
Member States in the euro area were in a much better position to weather the crisis than they 
were  before.  Fiscal  consolidation  was  unfinished  business  in  some  euro  area  countries, 
however, despite the good economic times. Public debt levels remained high in Greece, Italy 
and  Belgium,  while  fiscal  consolidation  was  slow  and  indecisive  in  France,  Greece  and 
Portugal. In other countries, public finances became dependant on fiscal revenues either from 
the financial sector or the real estate boom whose slump added to the deterioration of public 
finances  and  greatly  diminished  the  fiscal  room  for  manoeuvre  available  to  counteract  the 
effects  of  the  crisis.  Consequently,  several  Member  States  had  to  limit  or  withhold  their 

EN 

5 

   EN 

 
contribution to the joint fiscal stimulus as laid out in the European Economic Recovery Plan. 
If consolidation had been achieved, the euro area's fiscal response could have been even more 
decisive. 

Globally,  euro  area  governments  did  their  fair  share  in  the  concerted  global  effort  to 
sustain  demand  within  the  EU-wide  coordinating  framework  of  the  European  Economic 
Recovery  Plan  (EERP).  They  have  deployed  a  broad  range  of  sizable  fiscal  and  structural 
policy measures. The overall fiscal support amounts to about 4.6% of euro area GDP (about 
5% for the EU as a whole); it includes the effects from automatic stabilisers and the combined 
discretionary fiscal stimulus of Member States over 2009 and 2010 in the magnitude of 1.8% 
of euro area GDP. Of the 590 national measures reported by euro area Member States, 22% 
are  geared  towards  boosting  the  purchasing  power  of  households,  including  the  most 
vulnerable; 25% buttress investment; 32% provide sectoral or company support; and 21% are 
earmarked to improve the functioning of labour markets. According to the Commission's June 
2009  assessment,  most  measures  are  timely  and  well-targeted,  in  line  with  the  EERP 
principles. However, doubts about the reversibility of certain measures are a cause for concern 
as they may make expansionary policies less effective. 

The  aggregate  impact  of  the  euro  area  economic  policy  response  could  have  been  faster 
and  perhaps  stronger  if  co-ordination  had  started  earlier  and  been  more  comprehensive. 
While co-ordination matters for the EU as a whole, it is particularly important for euro area 
Member States given their close economic and financial inter-linkages and the fact that they 
share a common currency and a single monetary policy. Overall, the established mechanism 
of policy co-ordination within the euro area did not work well in the crisis. Working on this 
evidence, 
the 
implementation of national recovery measures in order to avoid unintended negative spillover 
effects  and  to  fully  implement  the  surveillance  framework  defined  by  the  Stability  and 
Growth Pact. More than ever, the euro area should exert leadership in these testing times. 

the  Eurogroup  committed 

the  co-ordination  of 

improving 

itself 

to 

4. 

THE  WAY  FORWARD:  ENSURING  EFFICIENT 
SUSTAINABLE GROWTH IN A CHALLENGING ENVIRONMENT 

INTERNAL  ADJUSTMENT  AND 

The crisis has clearly demonstrated the urgency for euro area Member States to make rapid 
progress  on  the  EMU@10  reform  agenda:  broadening  and  deepening  macroeconomic 
surveillance.  A  well-functioning  EMU  is  a  major  asset  for  the  EU  as  a  whole.  In  its 
EMU@10 communication2 in May 2008, the Commission proposed a three-pillar agenda to 
improve the functioning of EMU in the face of a rapidly changing global environment, ageing 
populations and rising concerns about energy and climate change. The domestic agenda called 
for  macroeconomic  surveillance  in  EMU  to  be  broadened  beyond  fiscal  policy  to  include 
macro-financial stability aspects and competitiveness trends, as defined in the context of the 
Lisbon Strategy for Growth and Jobs, and to ensure better integration of structural reform in 
overall policy co-ordination within EMU. It also called for the deepening of fiscal policy co-
ordination and increased surveillance. The external agenda of EMU@10 argued that the euro 
area should play a more important role in global economic governance. The crisis highlighted 
the need to forcefully implement this reform agenda. 

2 

'EMU@10:  success  and  challenges  after 10  years of  Economic  and  Monetary  Union'  Communication 
from  the  Commission  to  the  Council,  the  European  Parliament,  the  European  Economic  and  Social 
Committee, the Committee of the Regions and the European Central Bank - COM(2008) 238, 7.5.2008. 

EN 

6 

   EN 

 
                                                 
Broader  macroeconomic  surveillance  is  urgently  needed  to  spur  a  co-ordinated  policy 
response  to  the  competitiveness  challenge.  Resolute  and  urgent  policy  actions  need  to  be 
taken as structural divergences have the potential to undermine the cohesiveness of the euro 
area. Despite repeated warnings, imbalances within the euro  area were not treated at  a time 
when  economic  conditions  were  favourable.  Now,  the  crisis  is  forcing  an  adjustment  of 
current  account  balances  the  hard  way,  through  a  collapse  in  domestic  demand  and  sharply 
rising  unemployment.  This  is  most  notably  -  but  not  exclusively  -  the  case  in  countries  in 
deficit, such as Spain and Ireland. Moreover, the rebalancing of competitiveness trends risks 
being more protracted in view of: (i) the global nature of the crisis, which impairs an export-
led  strategy;  (ii) lower  potential  growth,  which  limits  the  room  available  to  rebalance 
accumulated  wage  and  cost  divergences;  (iii)  and  the  fact  that,  as  the  recovery  firms  up, 
countries  experiencing  weak  growth  may  face  higher  real  interest  rates  than  the  rest  of  the 
euro area. In an effort to broaden macroeconomic surveillance, the Eurogroup agreed in 2008 
to regularly review intra-euro-area competitiveness trends and to encourage Member States to 
take  action  to  adjust.  Addressing  the  underlying  causes  of  harmful  competitiveness 
developments in the euro area is a matter of common concern and must be an integral part of 
the area's exit strategy. 

The broadening of surveillance should also incorporate financial market developments in 
earnest. Over-indebtedness in  the  private  sector led to unsustainable economic trends.  Such 
financial  imbalances  should  be  detected  and  dealt  with  at  an  early  stage.  The  EMU@10 
communication  stressed  that  'while  market  integration,  particularly  in  financial  services,  is 
beneficial overall for EMU, it can also, if not accompanied by appropriate policies, amplify 
divergences  among  the  participating  countries'.  The  crisis  demonstrates  how  fast  financial 
shocks  can  hit  the  real  economy  and  how  strong  feedback  loops  are.  In  addition  to  the 
broadening  of  macroeconomic  surveillance  to  intra-area  competitiveness  developments,  the 
early detection of asset price booms appears essential to avert costly corrections of fiscal and 
external imbalances at a later stage. 

Surveillance should be deepened to ensure sustainable public finances. In the wake of the 
crisis, the combination of low growth and accelerating debt risks putting public finances in a 
precarious  situation,  just  when  the  impact  of  ageing  is  starting  to  set  in.  If  policies  are 
unchanged, public debt in the euro area is projected to reach 100% of GDP in 2014. As part of 
a  deeper  fiscal  co-ordination  in  the  euro  area,  a  firm  commitment  is  needed  for  a  fiscal 
strategy  that  can  appropriately  balance  stabilisation  and  sustainability  considerations  in  line 
with the Stability and Growth Pact. With a view to ensuring a consistent set of fiscal policies 
for the euro area, the euro area Finance Ministers agreed in June 2009 on terms of reference to 
provide  orientations  towards  the  formulation  of  government  budgets  for  2010  (Mid-Term 
Budgetary  Review).  Notably,  they  decided  that  as  soon  as  the  recovery  takes  hold,  and  the 
risks  of  an  economic  relapse  diminish  further,  the  balance  of  fiscal  policies  should  shift  to 
consolidation. Also, they agreed that the pace of fiscal consolidation should be differentiated 
across  countries,  taking  into  account  not  only  the  pace  of  the  recovery,  fiscal  positions  and 
debt levels, but also the projected cost of ageing, external imbalances and risks in the financial 
sector. 

Consolidation should also enhance the quality of public finances and stem the debt increase 
while  contributing  to  long-term  growth,  by  consolidating  non-productive  expenditures  and 
strengthening  incentives  for  raising  the  productive  capacity  of  the  economy.  In  addition, 
domestic  fiscal  frameworks  need  to  be  strengthened  and  made  more  conducive  to  effective 
consolidation  in  good  times.  Overall,  a  lesson  from  the  crisis  is  that  macroeconomic 

EN 

7 

   EN 

 
surveillance  should  consider  sustainability  as  a  cornerstone  for  elaborating  economic 
strategies. 

Co-ordination across policies and Member States should be enhanced to permit judicious 
exit strategies. Credible and well-coordinated exit strategies are particularly relevant for the 
euro  area  to  ensure  sustainable  growth  and  avoid  that  potential  growth  trajectories  fan  out 
when  the  economy  gains  strength  again.  Co-ordination  should  essentially  take  the  form  of 
common understandings on the appropriate timing, pace and sequencing of normalisation of 
policy  settings.  Eventual  withdrawal  of  fiscal  stimulus  and  business  support  measures, 
accompanied by the formulation of credible fiscal consolidation and structural reform plans, 
would  improve  the  outlook  for  price  stability  and  hence  facilitate  the  conduct  of  monetary 
policy.  Rapid  progress  on  financial  repair  would  be  essential  to  ensure  that  the  banking 
system  does  not  act  as  a  drag  on  the  recovery  and  the  price  stability  objective  of  monetary 
policy does not enter into conflict with the financial stability objective. Differentiated policy 
responses  will  need  to  be  incorporated  in  national  exit  strategies  so  as  to  achieve  the  best 
global output. In line with the Council recommendations to the euro area in the context of the 
Lisbon strategy, progress is needed on the implementation of reforms that enhance potential 
growth and facilitate adjustment to shocks. 

Lessons learned for governance. The crisis underscored the need to reinforce the framework 
for  euro  area  surveillance  and  governance.  In  its  2008  EMU@10  communication,  the 
Commission  had  already  underlined  the  need  for  euro  area  Member  States  to  show  clearer 
political  will  and  leadership  to  turn  common  understanding  into  concerted  policy  action, 
calling  for  true  ownership  of  the  Eurogroup  by  Member  States  as  a  policy  body  for  frank 
discussion and determined action. The Lisbon Treaty provides the necessary platform for the 
further  improvement  of  economic  governance  of  the  euro  area.  Highlighting  the  need  to 
develop ever-closer co-ordination of economic policies within the euro area, a new Protocol 
attached to the Lisbon Treaty gives formal recognition to the Eurogroup and its President. The 
Lisbon  Treaty  also  strengthens  the  role  of  the  Commission  in  the  surveillance  of  the 
functioning of EMU. 

United,  the  euro  area  can  influence  the  global  agenda.  The  emergence  of  the  G20  as  the 
forum of choice for the promotion of global economic and financial governance reform raises 
the stakes for the euro area. In the wake of the crisis, the global economy faces the difficult 
challenge  of  managing  the  transition  towards  a  more  balanced  and  sustainable  pattern  of 
growth  across  the  world's  major  economies.  To  this  end,  the  enhanced  role  of  global 
surveillance under the aegis of the IMF is warranted. In this context, the euro area should be 
considered  as  a  single  economic  entity,  which  will  continue  to  grow  in  importance  as  new 
members progressively join. For the euro area to speak with a strong voice at the global level, 
the EU external representation, particularly within the IMF, needs to be strengthened. Now is 
the  moment,  while  discussions  on  quota  and  representation  reform  are  gaining  momentum. 
This  is  why  the  Commission's  stance  as  conveyed  in  the  EMU@10  one  year  ago  is  today 
more relevant than ever. 

EN 

8 

   EN