If this crisis is not suitably resolved, the effects on the global economy and financial markets might be most significant not only due to the strong links connecting the main economies, but also because the doubts over the sustainability of public finances might ultimately pass through to other major developed economies. The euro area is the epicentre of a crisis whose resolution is key to what may happen in the European and global economies in the opening decades of the 21st century, and it is on this that I shall focus today. European integration can only move forward if the euro area economy operates once again without upheavals. And since European integration is fundamental to the well-being of all Europeans and, naturally, of Spaniards, Spain must, like the other countries and the European institutions, make every effort to resolve the crisis. The truth is, as the Governor of the Bank of France said last week, if we don’t resolve this crisis properly, a “horror scenario” might ensue. But I’ll resist the temptation of detailing all the adverse consequences that failure to overcome this crisis would have for European citizens. To quote Fernando Pessoa, “to be a pessimist is to see everything tragically, an attitude that’s both excessive and uncomfortable”. Therefore I’m going to take a realistic but optimistic approach, stressing the steps forward we have taken to date and presaging a happy ending for this crisis if the necessary measures are adopted. All the EU Member States have a responsibility to resolve the crisis.
Otherwise, a durable single currency would not be feasible. Yet given that political union in Europe over the short term is inconceivable, will a monetary union not be able to survive without political union? In my view, the most important lesson we’ve learned in this crisis is that it is possible to enjoy the benefits of a single currency without political union, but only if strong divergences between the member countries are avoided. This has been understood by the European Union and is what has prompted the changes to the Stability and Growth Pact and to economic governance, which are intended precisely to correct divergences before they become so great that they are difficult to redress. And it must be acknowledged that here a good deal of progress has been made over the past year. The unfolding of the crisis has shown that the governance model in place to date in the EU has been of no use in ensuring economic policy consistency or in managing crisis episodes flexibly and effectively. It’s now clear that public finances were not sufficiently restructured in the upturn, that macroeconomic divergences were excessive and that we need a well-designed financial aid mechanism to assist ailing countries swiftly and effectively. Mindful of this, European governments and institutions have taken major steps towards correcting deficiencies in three fundamental areas: the strengthening of fiscal discipline, closer surveillance of macroeconomic maladjustments and the creation of a permanent crisis-management framework.