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(BRUSSELS) – With Europe’s economy expanding for the fifth year in a row, the EU Wednesday looked back at 10 years since the start of the financial crisis confident it has turned a corner and delivering on jobs and growth.
The global financial crisis which began 10 years ago led to the European Union’s worst recession in its six-decade history. While the crisis did not start in Europe, shortcomings in the initial set-up of the EU’s Economic and Monetary Union were laid bare.
Today, the EU boasts unemployment at its lowest since 2008, stronger banks, rising investment, and public finances in better shape.
The European Commission welcomed the signs of resilience in the European economy but says much remains to be done to overcome the legacy of the crisis years.
Economic Affairs Commissioner Pierre Moscovici said the European economy’s recovery had firmed and broadened: “We must use this positive momentum to complete the reform of our Economic and Monetary Union.” But he drew attention to the social and economic divergences which had developed in and among Member States. “It is essential that our work going forward contributes to the real and sustained convergence of our economies,” he said.
It was ten years ago today, on 9 August 2007, that BNP Paribas became the first major bank to acknowledge the impact of its exposure to sub-prime mortgage markets in the United States, having to freeze exposed funds.
In the years that followed, what was initially a financial crisis turned into a banking crisis and a crisis of sovereign debt, soon affecting the real economy. The European Union fell into the worst recession in its history, which left deep marks on the public, on companies and on Member States’ economies.
The Commission says EU institutions and Member States responded to the crisis with strong political decisions to contain the crisis, preserve the integrity of the euro and to avoid worse possible outcomes.
The EU brought more regulation to the financial sector and improved economic governance; bolstered new and common institutional and legal frameworks; established a financial firewall for the euro area; supported countries in financial distress; improved Member States’ public finances; pursued structural reforms and encourage investment; improved banking sector supervision; increased the ability of financial institutions to cope with future challenges; and established ways to manage and better prevent possible crises.
As a result of these actions, Europe’s Economic and Monetary Union has been significantly overhauled and the European economy and notably the eurozone economy is looking back in shape.economy.
The European recovery is sustained and unemployment is steadily going down. The number of Member States belonging to the euro has increased from 12 to 19 and the euro is now the second-most important currency in the world. Out of the eight EU Member States that received financial assistance, only Greece is still under a programme and is due to exit it in mid-2018.
Only three Member States are now subject to the corrective arm of the Stability and Growth Pact, the so-called Excessive Deficit Procedure, down from 24 Member States at the height of the crisis.
However, the EU executive acknowledges that robust as it is today, the EMU remains incomplete and the road ahead for the euro will not be smooth. From the Five Presidents’ Report of June 2015 to the reflection paper on the Deepening of the Economic and Monetary Union of May 2017, it lists initiatives taken in recent years to draw the lessons from the crisis and prepare the EU for future challenges.
Reflection Paper on Deepening the Economic and Monetary Union
