Ministers call for better communication on economic crisis

traders_05.jpg

Amid public incomprehension over billions of euro being poured into saving the banking sector instead of EU industry, ministers underlined yesterday (5 March) that better communication of basic economics is needed to prevent social and political unrest.

“It will be difficult to make people understand political initiatives and actions if you cannot clearly explain the difference between the systemc nature and the importance of the financial sector, in particular institutes there, and the rest of the real economy,” Industry Commissioner Günter Verheugen told the press after a meeting of EU competitiveness ministers.

Verheugen said ministers had reached a “clear understanding” that both the EU and national governments need to change their ways of communicating about the crisis, to make people understand why billions were spent on the banking sector and not small companies, for example. “We need to be aware that the problem we have is potentially explosive and there is a lot of political and social dynamite in it,” he warned. 

“We have not yet hit the bottom,” said Verheugen, explaining that as uncertainties remain over the economic downturn, it is crucial to communicate that the recovery will depend “totally on whether and when we will be able to clean the banking sector”. 

“There is not a single company in the real economy that would make the whole economy collapse if it disappeared. Not a single one, not Opel, not Volkswagen, not Siemens, not Skoda. It would be hard and difficult but the European economy would survive. It is completely different with certain financial institutions. If they would collapse, the whole economy would fall with them. That is the difference,” Verheugen continued.

Ministers reportedly agreed that the present crisis will accelerate structural change in important industrial sectors, such as the automotive industry, chemicals, furniture, textile or consumer electronics, but that policymakers should not interfere in the process. “Structural change is not to be decided by governments but by companies. And their criteria is sustainability and long-term profitability of the company, not political opportunity,” Verheugen said.

As for the automotive industry’s very public calls for help, Verheugen said “there will be no specific sectoral EU rescue plans,” because there is neither money, a legal basis nor the political will. “We are still in a market economy where strategic decisions lie in the company management level, not the political level.” 

If member states want to help various sectors, they can do so via state aid (if approved by the EU) or by developing better infrastructure and legislative frameworks for business.

Verheugen also announced his intention to organise a meeting of the EU states which host General Motors (GM) plants, to help them coordinate a European response and thwart the US firm’s attempts to discuss the issue bilaterally at regional and local levels. He said at several governments had already complained that GM is not being transparent about its plans for its EU sister companies. 

“We expect GM to disclose everything – what their plans are for European companies and locations, what they are doing with property rights, and especially, is GM prepared to maintain responsibility for the European companies or not?,” Verheugen concluded.

Subscribe to our newsletters

Subscribe