The economic consequences of adjustment  A comprehensive process of restructuring and reform such as we are seeing in the euro area naturally has economic consequences. Let me turn to those consequences in the second part of my remarks. As the public sector is consolidating, and the private sector is deleveraging and rebalancing towards exports, the external sector has to go into surplus for a period of time. The euro area current account surplus is expected to rise above 2% this year. There have been some claims recently that this constitutes a “beggar-thy-neighbour” approach as Europe is importing global demand. I find this quite contradictory. Observers cannot call on the one hand for Europe to avoid the mistakes of Japan, and then on the other hand criticise Europe for the inevitable consequences of doing so. It is also a very short-term view. Europe’s contribution to global demand in the years before the crisis came largely through governments, firms and households taking on too much debt. This had to change. The ongoing process of reform and restructuring will allow Europe to support global demand in the future – but in a sustainable and stable way. I would add that ensuring balanced growth between major economies would be greatly helped by efforts to accelerate regional free trade agreements, in particular the Transatlantic Trade and Investment Partnership (TTIP) between Europe and the US.
Jörg Asmussen: Europe 2014 – an outlook from the ECB Speech by Mr Jörg Asmussen, Member of the Executive Board of the European Central Bank, at the Council on Foreign Relations, New York, 21 November 2013. *  *  *  The latest economic data suggest that the euro area is gradually advancing on the road to recovery – but doubts remain about where that road is leading. Some commentators think that the road will be so long and difficult that Europe will face a “lost decade”, like Japan experienced in the 1990s. Yet this is not my view. I would like to us my remarks today to argue that the changes taking place in the euro area today will allow us to take a different path from Japan – although we need to persevere to ensure that a “lost decade” is definitively avoided. At the same time, observers should understand that the process of restructuring and reform this entails has certain economic consequences – namely a period of current account surpluses. I see this as part of a healthy adjustment that will help the euro area to play a constructive role in global demand in the future. 1. Learning the lessons of Japan  Let me start by illustrating how the euro area is learning the lessons of Japan. The term a “lost decade” came to be applied to Japan not just because economic outcomes were poor, but also because little was done to address its structural challenges.