to the interaction of economic policies. the readiness of governments worldwide to fight an exceptionally deep economic contraction with large fiscal stimulus packages was certainly a major reason why the recession was overcome so quickly. this swift return to positive – although moderate – growth was, in many cases, instrumental in avoiding worse and self - reinforcing negative effects on structural unemployment, consumer confidence and risk aversion. budget deficit in selected countries general government gross debt in selected countries % of gdp % of gdp - 5 - 10 - 15 - 20 - 25 source : european commission. 2012 : forecast. czech rep. ireland portugal greece austria spain italy france germany uk u. s. a. japan czech rep. portugal ireland austria greece spain italy france germany u. s. a. uk japan euro area - 35 euro area - 30 source : european commission. 2012 : forecast. however, this strong fiscal reaction also came at high costs. budget deficits exploded and debt - to - gdp ratios reached record levels. in some highly indebted european countries, this translated into a veritable debt crisis. markets that, for years, had failed to adequately price fiscal imbalances, rediscovered risks associated with high debt levels. when markets react late, they tend to overreact. thus, bond spreads and the price for credit default insurances soared. rising refinancing costs further aggravated fiscal consolidation. as recourse to market funds is currently not possible, the highly indebted countries need international financial assistance to tide them over until fiscal consolidation starts to be effective and markets regain confidence. but even if markets will have stabilized, debt stabilization will require many years of substantial primary surpluses. bis central bankers ’ speeches – the fourth lesson to be learned from the crisis is therefore that we need to improve fiscal policy frameworks. we need a long - term commitment to fiscal stabilization at the national level and effective warning and supervisory mechanisms at the european level. we need to make sure that – once the worst is over – good economic times are used for fiscal consolidation so that fiscal margins are there when the next recession approaches. an exceptional crisis calls for exceptional measures. while it was commonly accepted prior to 2008 that rules - based fiscal approaches and the free operation of automatic fiscal stabilizers are best suited for ensuring long - term sustainability, the severity of the recession and the high level of uncertainty has led to a renaissance of fiscal discretion. quick and determined action was certainly a key factor in keeping the recession short. however, long implementation la

and steel production, which was a natural sector to start with, given the strategic importance of these industries for arms production. the crucial achievement of the european coal and steel community was that, for the first time in history, european governments ceded part of their sovereignty, albeit only in a limited and wellspecified area, to a joint, supranational authority. this pragmatic, step - wise approach - to pick out a special area and find a common solution for that specific area, leaving other things for later - was to become known as the " community method " of integration. you can trace this approach up the most recent steps in european intergration and, i would expect, it will continue to form the basis also for the next years to come. a guiding principle in this context was to become the idea of " political integration through economic integration ". let me elaborate a little bit. against the backdrop of the rise of the soviet union and the outbreak of the cold war, the next obvious areas of integration in the early 1950s would have been a common defence policy, which would, in turn, have required a political union. however, as it turned out, this was simply beyond what some countries, notably france, were prepared to go along with. so an alternative strategy was needed. at the conference of foreign ministers in messina on 1 june 1955, it was decided to start negotiations on two further areas of integration. the outcome was the signing on 25 march 1957 of the treaty of rome, which established the european economic community and the european atomic energy community. again, integration was carried forward in selected fields - i. e. the establishment of a customs union and a common market, on the one hand, and a joint policy on the sensitive area of nuclear energy. ladies and gentlemen, by now, you will have noticed that european integration does not happen following a once - approved long - term strategy, but happens through a series of initiatives, often represented by outstanding personalities, with periods of stagnation in between. further important examples of such initiatives, which exert their influence up to now, are the single market program of 1985 and the maastricht treaty of 1992. the european communities had been experiencing an extended period of economic and political stagnation since the second half of the 1970s, for which the term " eurosclerosis " had been coined. one of the cornerstones of continued integration at that critical point in time was the single european act of 1985.