Rede des Bundeskanzlers beim Economic Symposium
President of the Commission,
Vice Chancellor,
Ladies and Gentlemen,
The Austrian Federal Government has taken a wide range of actions in order to counter the economic crisis. Austria has – as is well-known – the lowest unemployment rate in Europe.
Consolidation packages involving income and expenditure side measures of more than 27 billion euro until 2016 have become necessary. This also included actions taken to save banks.
States do, however, not save banks only for the sake of banks or to protect their shareholders or creditors. No, they do so because states hold an overall responsibility – for employees, depositors, companies and borrowers. And all across Europe states have taken similar actions in order to enable the Union to manage the current economic crisis.
A frequently asked question in this context is: What are the benefits of European integration? We therefore commissioned the Austrian Institute of Economic Research with preparing a study on the pros and cons of European integration and the impacts a re-dimensioning of the euro area might have on Austria.
Let me briefly quote from this study: The opening to the East results in an annual increase of 0.2 per cent in Austria’s GDP growth. EU membership brings an additional 0.6 per cent increase per year, membership in the eurozone and EU enlargement each contribute with a plus of 0.4 per cent to Austria’s annual GDP growth.
The Institute calculated that the accumulated effect of European integration – which is due to overlaps lower than the sum of individual effects – contributes with a plus of 1 per cent annually to Austria’s GDP growth.
The benefits of eurozone membership include: A growth increase that results in an increase in economic output of 16.5 billion in 2012. Since the introduction of the euro in 2002, Austria’s economy has grown faster than the European Economic Area average each year, becoming the third-wealthiest EU Member State and, what is most important, the country with the lowest unemployment rate.
In contrast to that a breaking-up of the eurozone would lead to the following results according to the Austrian Institute of Economic Research: 32 billion euro less GDP in the first year – equalling a sharp economic decline of 11 per cent and the most serious recession Austria has seen to date. It would take our country 5 years to recover from this slump. The unemployment rate would increase by 3.3 percentage points – meaning that an additional 140,000 people would have no job.
We cannot even predict the social costs and the political consequences of such a scenario.
Scenario back to national currencies
Allow me again to quote the Austrian Institute of Economic Research: "In this case the overall economic and social costs would be clearly higher than the above mentioned GDP losses of 32 billion euro." "The probable revaluation of the Schilling would result in enormous losses in market shares on the global market".
"It is to be expected that speculative attacks will be launched against the Schilling on the financial markets which would contribute to a further increase in exchange rate volatility".
These findings clearly show that we must be constructive – and not destructive.
Never before has the number of people in employment in Austria been as high as it is to date. More than a million jobs directly depend on Austria’s performance in the field of exports. 70 per cent of our external trade is in the EU 27 with more than half of it in the eurozone alone. In 1999 our goods export rate amounted to just a little over 30 per cent, now it has reached almost 43 per cent. And Austria currently enjoys an excellent position on the financial markets.
It is therefore necessary to take the following economic policy steps:
- Introduction of the financial transactions tax by the end of the year in the Coalition of the Willing, involving nine, ten or eleven EU Member States. The process is already underway, the relevant motion is to be submitted soon. This is a major step and a major success for Austria, the country that has most insistently advocated the financial transactions tax – as Jose Manuel Barroso has frequently stressed.
Let me take this opportunity to also thank the EU Commission very warmly for its work and support in this area. - Common banking supervision equipped with rights of intervention enabling swift action to be taken where needed.
- A banking licence for the ESM. Many economists, and Governor Nowotny from the Austrian National Bank, are convinced that it is necessary to clearly increase the ESM’s power to act.
Some mobilisation of political will is, however, still necessary in this context. - Common debt management in the eurozone in order to further protect the currency area against speculation and to ensure that the entire currency area in which 330 million people live and work remains secure and unimpaired.
Ladies and Gentlemen, let me clarify one thing: It would be naïve to accept joint liabilities without ensuring that strict rules for budget discipline, for a consolidation course are in place – including a joint European control and management mechanism.
Social union, economic union, democratic union – these are developments, European goals and visions for Europe that must be realised together. There is no "either or", but only a "combination of all".
It has a certain similarity with mountain climbing – a tempting comparison here in the beautiful alpine village of Alpbach. Here a combination of good equipment and good cooperation are key – because climbing a mountain is a joint project.
I hope for your continued support in this joint effort, thank you for your attention and wish you a pleasant stay and interesting discussions.
You will find this speech from Chancellor Werner Faymann by the Europe Economic Symposium 2012 here:
