The positive behaviour of the economy contributed to and, in turn, was stimulated by the correction of the macro-financial imbalances accumulated during the pre-crisis and crisis periods. Such corrections were particularly significant as regards private sector deleveraging, the reduction of unemployment, the progressive absorption of disequilibria in the housing market, and the balancing of the external accounts, not least due to significant gains in competitiveness. Looking forward, nonetheless, a number of questions remain open. Will this process continue at such a strong pace? Under which conditions would the recovery turn into a sustained and prolonged expansion? Which are the main vulnerabilities and weaknesses that policy-makers should tackle in order to raise potential growth and the well-being of the population? Is the Spanish economy, within the EU framework, well equipped to cope with the next cyclical downturn? Is the euro area as a whole well prepared? The programme of this conference approaches these questions, trying to identify some answers. The discussion is organised around four main topics: how to lower fiscal vulnerabilities; which are the main challenges for the Spanish labour market to function properly; how to raise medium-term growth; how to advance in the euro area architecture. Lowering fiscal vulnerabilities The first session of this conference deals with the policy priorities for addressing mediumterm fiscal challenges in Spain. The panellists are going to explore options to bring down the high level of public debt and to handle rising pressures from ageing population.
Among them: the setting-up of an European Monetary Fund, which would take over the current functions of the European Stabilization Mechanism, eventually adding the role of common backstop for the Single Resolution Fund; the establishment of an European Minister of Finance, who would also be Vice-President of the European Commission and Chairman of the Eurogroup; and the creation of a common stabilisation tool for investment, which should not preclude the future development of a genuine European budgetary capacity for economic stabilisation purposes. Those are proposals that deserve careful consideration. Moreover, the crisis has made it clear that the European budgetary framework is very complex, which highlights the need to simplify it. Recent proposals, which seek to reduce the current excessive number of rules, by focusing on the public debt to GDP ratio, as a medium-term anchor, and to the expenditure rule, as an operational tool, seem promising. In any event, reinforcing the oversight and control of fiscal rules is necessary to ensure their fulfilment. The aim should be that the budgetary governance framework is able to encourage countries to generate room for manoeuvre during expansionary phases, so that the stabilising capacity of fiscal policy may increase in the euro area, as a whole, at times of crisis. 8/9  Summing up: much work remains to be done in the coming months and years. We should make good use of the current benign environment to progress in our European integration agenda.