European Commission President Jose Manuel Barroso gave his “State of the Union” address to the European Parliament today. Below are key extracts. You may be interested in the Financial Transaction Tax and Mr Barroso’s plans for greater economic integration in the eurozone.

Greece

Greece is, and will remain, a member of the euro area. Greece must implement its commitments in full and on time. In turn, the other euro area members have pledged to support Greece and each other. As stated at the euro area Summit on 21 July: “We are determined to continue to provide support to countries under programmes until they have regained market access, provided they successfully implement those programmes.”

That is why I (Barroso) created the Task Force forGreece.

We have just launched an action plan based on two major pillars:

• Around 100 viable and high-quality projects, investing in all Greek regions, to make the best use of Greece’s remaining allocation of the structural funds.
• And a major drive to reduce bureaucratic procedures for European co-funded projects.

€ 15 billion remain to be spent in Greece from the structural funds. This will support the Greek economy with an urgent programme of technical assistance to the Greek administration.

A programme of € 500 million Euros to guarantee European Investment Bank loans to Greek SMEs is already under way.

The Commission is also considering a wider guarantee mechanism to help banks lend again to the real economy.

All of this represents a huge support toGreece’s fight back and Greece will have to deliver concrete results. It must break with counter productive practices and resist vested interests.

But we have to be clear about this. This is not a sprint, but a marathon.

Full economic union in the eurozone

The task of building a Union of stability and responsibility is not only about Greece.

The economic outlook that we face is very difficult. We are confronted with the negative effects of an ongoing global re-assessment of risks. It is therefore our responsibility to rebuild confidence and trust in the euro and ourUnion as a whole.

And we can do this by showing that we are able to take all the decisions needed to run a common currency and an integrated economy in a competitive, inclusive and resource-efficient way. For this we need to act in the short, in the medium and the long term.

The first step is to quickly fix the way we respond to the sovereign debt crisis.

This will require stronger mechanisms for crisis resolution. We need credible firepower and effective firewalls for the euro.

We have to build on the EFSF and the upcoming European Stability Mechanism.

The EFSF must immediately be made both stronger and more flexible. This is what the Commission proposed already in January. This is what Heads of State and Government of the euro area agreed upon on 21 July. Only then, when you ratify this, will the EFSF be able to:

• – deploy precautionary intervention;
• – intervene to support the recapitalisation of banks,
• – intervene in the secondary markets to help avoid contagion

Once the EFSF is ratified, we should make the most efficient use of its financial envelope. The Commission is working on options to this end.

Moreover we should do everything possible to accelerate the entry into force of the ESM.

And naturally we trust that the European Central Bank – in full respect of the Treaty – will do whatever is necessary to ensure the integrity of the euro area and to ensure its financial stability.

But we cannot stop there. We must deepen economic coordination and integration, particularly in the euro area.

This is at least as big a political task as an economic one.

Today, you (the European Parliament) will vote on the so-called “six-pack” proposals that we put in front of you and the Council one year ago. This “six-pack” reforms the Stability and Growth Pact and widens surveillance to macro-economic imbalances. We are now back very close to what the Commission originally put on the table. You have played a decisive role in keeping the level of ambition of these proposals, and I really want to thank you and congratulate you for that.

This legislation will give us much stronger enforcement mechanisms. We can now discuss Member States’ budgetary plans before national decisions are taken. This mix of discipline and integration holds the key to the future of the euro area. Only with more integration and discipline we can have a really credible euro area.

These are indeed important steps forward, but we must go further. We need to complete our monetary union with an economic union. We need to achieve the tasks of Maastricht.

It was an illusion to think that we could have a common currency and a single market with national approaches to economic and budgetary policy. Let’s avoid another illusion that we can have a common currency and a single market with an intergovernmental approach.

For the euro area to be credible – and this not only the message of the federalists, this is the message of the markets – we need a truly Community approach. We need to really integrate the euro area, we need to complete the monetary union with real economic union. And this truly Community approach can be built how? In the coming weeks, the Commission will build on the six-pack and present a proposal for a single, coherent framework to deepen economic coordination and integration, particularly in the euro area. This will be done in a way that ensures the compatibility between the euro area and the Union as a whole. We do not want the euro area to break of course the great acquis of the single market and all our four freedoms.

For all of this to work, we need more than ever the independent authority of the Commission, to propose and assess the actions that the Member States should take. Governments, let’s be frank, cannot do this by themselves. Nor can this be done by negotiations between governments.

Indeed, within the Community competences, the Commission is the economic government of the Union, we certainly do not need more institutions for this.

For a reason the Treaties have created supra-national institutions. For a reason the European Commission, the European Central Bank, the European Court of Justice were created. The Commission is the guarantor of fairness. Moreover, the Commission, which naturally works in partnership with the Member States, is voted by and accountable to this House. The directly elected Parliament both of the euro area and of the European Union as a whole.

Financial Transaction Tax

In the last three years, Member States – I should say taxpayers – have granted aid and provided guarantees of € 4.6 trillion to the financial sector. It is time for the financial sector to make a contribution back to society. That is why I am very proud to say that today, the Commission adopted a proposal for the Financial Transaction Tax. Today I am putting before you a very important text that if implemented may generate a revenue of above € 55 billion per year. Some people will ask “Why?”. Why? It is a question of fairness. If our farmers, if our workers, if all the sectors of the economy from industry to agriculture to services, if they all pay a contribution to the society also the banking sector should make a contribution to the society.

And if we need – because we need – fiscal consolidation, if we need more revenues the question is where these revenues are coming from. Are we going to tax labour more? Are we going to tax consumption more? I think it is fair to tax financial activities that in some of our Member States do not pay the proportionate contribution to the society.