BRUSSELS – Five years after the outbreak of the financial crisis, Europe’s economic and political situation remains fragile. A mild recession is expected in Europe this year, and unemployment is on the rise. Beyond deficit reduction, we need to implement a €120 billion ($155 billion) European investment plan, and deepen the European Single Market to unleash its growth potential.
But we also need other structural measures. The European Union must put an end to the negative feedback loop between individual member states and their national banking systems. Between 2008 and 2011, EU taxpayers granted banks €4.5 trillion in loans and guarantees. In some countries, the threat of bank recapitalization with public funds has resulted in a drop in market confidence and a huge rise in interest rates.