 Good morning everyone. Thank you for joining us at this very important session. Welcome to the World Economic Forum, CNBC Debate, the future of the Eurozone. How will the Eurozone economies emerge from the current crisis? Before we begin and I introduce our special panelists this morning, let's take a listen on how this has played out on CNBC. Look at this. We are going to be showing you some clips right now of some business leaders and heads of state who have discussed the happenings in Europe over the last six months and the preceding two years. We want to get their take on what has occurred in the preceding two years and where are we today? After you hear from these distinguished people, having spoken about the events in the Eurozone, we will hear from our distinguished panel on where we are today. Once again, take a listen. Let's come outside the parliament and form the police line. They have no doubt whatsoever about the strength of the Euro, about its permanence, about its irreversibility. We need to take decisive action to help stabilize the Eurozone. We's future is within the Eurozone. $146 billion for a nation which is only 2.5% of the Eurozone GDP and they think that if Greece goes, other bigger nations could go. Failure to resolve that situation would pose threats to the European financial systems, the global financial system. The authorities will do whatever it takes to hold the system together. The alternative is just too terrible to contemplate. The biggest headwind the American economy is facing right now is uncertainty factor. I have decided on my own counsel to step down as leader of the Unified. Waiting news, the Portuguese Prime Minister Socrates has finally expecting to get the announcement on the new free government. It's only a promise at the moment. From the Italian Prime Minister, Silva Berluskeli, that he'll step down. We just heard that the ruling Spanish party has just lost the election. It's often discussed that leaving the Euro is an option for Greece. I think this is really not an option. What I think is needed is to extract more in terms of overall productivity and competitiveness of Europe by finally creating a really deeply single market. We must all draw the lessons from the ongoing crisis and help to solve it. And this goes for the financial sector as well. The ECB is the only really functioning European institution, whether they like it or not. Gaining credibility is a long and laborious process. Maintaining is a permanent challenge, but losing credibility can happen very, very quickly. And joining me right now on stage to discuss the developments and where we are right now, all the way to my left, Wolfgang Scheuble, German finance minister, Francois Baron, French finance minister, Louise de Guindos, a Spanish economy minister, and Oli Ren, European Monetary Affairs Commissioner. Gentlemen, thank you very much for your time and for speaking to us today. We just heard Mario Draghi say that confidence is the most critical part here. Minister Baron has the most recent facility by the ECB instilled stability and confidence in terms of where we are right now. Hello to everybody. Mario Draghi took a decision with the governing council of the ECB, which was a very important decision in the framework of the agreement at the 9th of December. There was a debate between France and Germany, as you know, within the Eurozone about the status of the European Central Bank and about its qualifications, lender of last resort. Now, some of us in the world in general and within the European Union consider that it was a reasonable debate. Now, the debate no longer exists because the case law in Strasbourg, the case law in Europe, Monty, Merkel and Sarkozy have decided that the ECB will no longer be at the centre of the debate. The ECB is considered independent. It has its own policy and we can certainly say whether we think that this or that decision is right. But the unlimited amount of liquidity for banks for three years at 1% has considerably reduced the tensions in the European banking industry and it's very important because it will enable us to restore confidence gradually. But it's not enough, of course. There will have to be more tranches. We'll have to confirm the agreement of the 9th of December on the two issues of the agreement between the heads of state of government in the 9th of December. A fiscal issue, a treaty, ratification of the treaty and a solidarity issue and thought about how we can together continue to support growth. Minister Scherbley, how do you see it? In German and France, see it basically in a very same way. The cause of the crisis is basically the fact that there has been a lack of fiscal discipline in a number of countries in the Eurozone and a lack of competitiveness of a number of countries. If we want to overcome the crisis, if we want to restore the confidence which has been lost, as Mario Draghi has just said in this clip, then what we have to do is first of all to fight against the causes of the crisis. In other words, that's something that has to be done in the relevant countries. That is happening and where it's happening, the developments on the markets are positive. That's the case in Italy, it's the case in Spain. We're seeing that confidence is gradually being restored. Second thing is that we need a better structure for the European currency. This is what we're doing with the fiscal compact and with the European stability mechanism and the agreement has been reached by finance ministers this week and it will be put before the heads of state and government on Monday and we hope that we can sign it in February and we shall be able to bring it into force very soon and we hope that we can quickly pay capital to it and the fiscal compact will do something which we haven't had enough of so far, which is institutions and rules which make it possible for us to agree on a common fiscal policy in Europe and then of course we must also strengthen the competitiveness of European countries and that is the task that the European Council will have on its agenda next Monday and of course these things don't happen overnight and while these things are happening we need solidarity. This is the solidarity mechanism, this is something which the ECB is doing in its independence of course but it's doing what is necessary and we must make sure that we don't set the wrong signals, the wrong incentives. We mustn't prevent things that must happen from happening first but if we all act together then we're on the right track and we shall do everything we need to do and the European Union will have a stable currency and if we will be able to deal with the debt problems in other parts of the world which are bigger than they are in the Eurozone. We will get back to the comment you made. We must prevent things from happening because I think that we all would like to know specifically more on that comment but Minister Gindos from your standpoint how do you achieve what Minister Schwerble is saying in terms of solidarity rather and unity? Well I am in broad agreement with what François and Wolfgang have said about liquidity. Liquidity is not the final cure to the problems that we have right now in the Eurozone. It's a helping hand but not the final cure but I think that they fully agree also that what we have to do is to first of all to put our houses in order to advance in fiscal consolidation to avoid and to circumvent the problems that we made in the past in terms of public deficit and excessive level of debt and simultaneously and I think that this is going to be in the agenda over the next months and weeks to try to take the measures to foster growth and I think that we are going to speak more and more about growth and employment and I think that that will be the agenda of the next weeks. We are very close to have a new institutional framework that I think that will be extremely useful to avoid the mistakes and the flaws that we had in the past and simultaneously I think that we have to bring to the fore the agenda of growth, of reforms, of employment. Isn't this the crux though of the problem in terms of moving forward? Ali Ren, how do you achieve growth in a moment of time when you actually are implementing austerity? That is indeed the key question for Europe at this juncture and in order to create foundations for sustainable growth and job creation we first have to resolve the sovereign debt crisis and mitigate the banking sector facilities. Why so? Because this is essentially a crisis of confidence and in order to resolve this crisis of confidence we have to do things like the European Central Bank has been doing. I find the ECB actions very important in terms of avoiding a credit crunch in the European economy and also facilitating some more favourable bond auctions of say Italy, Spain and also the return of Ireland to the bond market in the last couple of days. So the ECB actions are important but of course not enough alone and therefore we need to have focus on basically three things. We need a new fiscal compact and we are in fact revamping the institutional architecture of Europe so that we are soon going to have an Economic Monetary Union Mark II. It is going to be a very different structure than the previous one and in the new structure prevention is the name of the game we want to prevent the kind of fiscal crisis or external imbalances that have happened in the past years with terrible economic and human costs. Second, we need stronger European financial firewalls and we are working this out in these weeks and I expect that we can come to a positive conclusion where we also need support from our American and British friends in a sense that we need to increase the resources of the International Monetary Fund and third, yes, we need a focus on reforms and growth employment as Louis and his colleagues were saying and in this regard I would draw your attention to the fact that we have in fact reforms going on in Europe. Italy is moving faster in its structural reforms Spain is moving and in fact all the European Union Member States are doing their part both in fiscal consolidation and in terms of structural reforms. So we have a somewhat better sentiment for the moment. Now it is not the time for us to go further, it is time to further build confidence and that's why the coming days are so important because we are going to finalise some important decisions that will facilitate better confidence in the European economy so that we can release and liberate the Keynesian animal spirits for growth investment and employment and who does not believe in the animal spirits does not believe in the market economy. Olli you said some very important themes there and I would like all of your commentary on this. Let me first take on the firewalls how much bigger and deeper firewalls would you like to see? What are we talking about? What's your expectation? We have already decided that the new permanent European stability mechanism will have a capital base of 700 billion euros which will provide an effective lending capacity of 500 billion euros. Now we have in operation a temporary European financial stability facility which has consumed some around 100 something and with the new Greek program we'll have something about 200 billion euros probably which leaves around 250 billion euros in this temporary EFSF. The question will be whether we can combine this to the ESM and the EFSF. That's something that the ministers and the leaders of the Eurozone will have to discuss and decide in the coming weeks. In parallel with the IMF where Christine Lagarde has made a request for an increase of 500 billion euros. The Eurozone has committed already 150 billion euros so you can calculate in which ballpark, in which range of hundreds of billions we are talking about when we talk about reinforced financial firewalls for the sake of providing financial stability in Europe. Chancellor Merkel has made some bold statements about the long term and what needs to be done over the long term. But as we sit here today the short term seems quite critical as we await a decision between Greece and its creditors what is the plan over the short term? First of all Marcus you never must do the opposite in the short term but in the long term because if you want to regain credibility you have to do the same in the same direction in the short term in the long term. That is one of the critical issues and therefore we are working on fighting the reasons of the crisis and we will have do what is needed and we will decide what will be needed to buy the necessary time we need to. In the short term we are negotiating with Greece Greece is a very specific case. You can't take any consequence for any other member states in the euro. It is totally different. It is a very specific case in Greece. We need a reduction of the deaths and it has been approved that Greece has to be reduced by 50% and we are negotiating the final negotiations and we were very clear on Monday in the euro group that we need for a new program for Greece a death sustainability and that means the overall death in Greece not over 120% GDP in 2020. That has to be achieved. It is not easy but it is possible and it will be done in the coming days. I am quite optimistic. Then we need a new program in Greece and Greece has and that is maybe the most critical issue and we discussed it very clear on Monday and Maria Draghi, the ECB was very clear Greece has not only to commit itself, Greece has to deliver because Greece has committed itself two years ago and not all of the commitments has been delivered and fulfilled and that is one of the critical issues to regain confidence and that must have to be done in Greece and we must not give the wrong incentives no firewall. You can make any firewall, any figure. It will not work if the real problems will not be solved. I would like to get all of your takes on something that has been talked about very much in the market and that is of course a default in Greece. What is the worst case scenario? Many people expect Greece to default. What is the worst case scenario? We don't expect the default in Greece. I know that most participants in markets have lengths for a long time in prices but I don't expect the default in Greece. I am sure that if everybody is ready to deliver what has been agreed and all the partners of Greece are ready to do it, we will avoid we can avoid and we will avoid a default of Greece but of course the private sector has to take its responsibility. That has been agreed first time in July, in the summit of July last year it's not a new story discussing the concrete figures and I am quite optimistic we can avoid it but it depends on that Greece is ready to deliver and to fulfil its commitment. Let me say first of all with the greatest respect I have for my colleagues we're not here in a negotiating session of the Eurogroup because the question that you raised about the firewall is an essential question in our discussions with Wolfgang and other colleagues we consider and France defends this position that the higher the firewall the less it will have to be used that's the deterrent effect one of the lessons we control from the crisis is that we have to deal with the Greek case, avoid contagion put in place and make arrangements necessary for fiscal consolidation for fiscal economic convergence so that discipline means something, there have to be sanctions we've found the balance in our discussions with Wolfgang and other colleagues about the level of structural deficit about the level of reference for the growth and stability pact we still have a slight debate about the reference, the benchmark for the debt that's a part of our discussions and we must advance at the same pace with the same intensity on the issue of solidarity and the issue of solidarity has already taken form we're anticipating the permanent protection mechanism we're bringing it forward by almost six months and if we can bring it forward even faster we shall do it but we brought it forward already by six months is to accompany the idea that the firewall is probably one of the best responses but that's one of the issues I must say that we haven't dealt with this finally today but it will be on the agenda of our leaders on Monday I also think that it's very simple to try to focalize the future of the eurozone on the problems of Greece with its creditors but I think that this is an oversimplification I think that much more important than that is the actions that I think that we are taking in order to improve the institutional framework of the eurozone in the future to avoid the mistakes that we made in the past and to have a much more united common currency area and in that regard I think that for instance the discussion that we are having about the fiscal compact even the willing and the purpose of the different garments to deliver I think that it's going to be the key element in that regard for sure that we are going to need firewalls, backstops with ample liquidity with a lot of resources but I think that at the end of the day the vital element to restore confidence on the future of the eurozone is going to be the institutional framework that we are going to put in place and simultaneously the degree of commitment of the domestic governments with this institutional framework and with the rest of the partners of the eurozone and in that regard the perception I am the younger arriving to office but the perception that I have and the perception that I have obtained is that there is a growing consensus that this is the way forward we have a problem with Greece, we have a problem with other countries of the past, but we have a concrete consensus that in the future we are going to try to avoid and we will act preemptively to avoid the problems that we had in the past but let me follow up and ask the same question that minister Scherbley answered a moment ago the long term plan is in place, everyone agrees on the long term objectives but what about the short term? but I think that the difference between the long term and the short term as Wolfgang has said is more confusing than many think if we start to create a credible plan that creates confidence in the short term I think that we are putting the first steps in order to alleviate the shorter pressure that we are suffering right now again, it's very easy to think and to elaborate on the Greek situation but I think that is much more important to have a credible plan in terms of fiscal union in terms of corporate governments in terms of commitment from the different member countries with this new situation I think that that would alleviate many of the jittery that we are seeing right now in the markets so how big of a firewall would you like to see? I would not say any figure so big enough and flexible enough to avoid using it and in order to avoid using this firewall I think that the main element that we have to take into consideration the main element that we have to take in place is a new fiscal framework a new corporate governance framework and simultaneously the commitment the clear commitment of the different governments with fiscal austerity and with structural reform I think that if we have these three pillars in place you know firewalls are there not to be used to be a sort of deterrence Paul-Iran, I'd like to get your comments on all of this but from what you've heard so far will this be enough to calm the markets and stop any dislocation which of course would accelerate the problem I have a long time ago stopped predicting the behavior of the markets on the basis of policy decisions but having said this I think for the market forces who are present in this audience I think there is one I mean there are many but one very important observation you can make there is in fact quite strong unity among the ministers of the Eurozone and the European institutions as well as it guards how we need to tackle this crisis and in fact while I know more or less how the Eurozone will look like say in three years I must say that the next three days will be very crucial for that future of in three years in other words we are just about to close a deal on private sector involvement between the Greek government and the private creditor community if not today maybe over the weekend but in any case preferably still in January rather than in February we are very close and we have to have a sustainable solution for Greece even if as Wolfgang said Greece is a special and unique case and private sector involvement in that sense will not be applied to any other country of the Eurozone and then we have two very important decisions related to this basic fair deal between reinforced fiscal discipline on the one hand and reinforced financial firewalls on the other hand the treaty on new fiscal compact will be finalized on Monday which will help create a much sturdier framework of the Eurozone economic governance and then in parallel the treaty on European stability mechanism will be concluded this will be a very important three-day period for reinforcing confidence into the Eurozone and I'm sure that we will succeed in these decisions and I hope of course that it will have a positive confidence-building impact on the market sentiment let's talk about some of the ideas out there Minister Scherbley talk to us about the possibility of a Eurobond do we need a Eurobond? Mario Monti backed the idea before becoming Prime Minister who pays and what are the terms? the problem of Eurobonds is as long as you don't have a structure in the European institutions in the European treaties to have similar structure for the fiscal policy we have for the monetary policy because the very specific situation in the European currency is we have a European common monetary policy no member state has sovereignty only in monetary policy that is the very specific it's difficult to understand if you are abroad from Europe but in Europe we gave up parts of national sovereignty to the European institutions in the monetary policies a European we have a national fiscal policy and that makes the problem as long as we have not something like we are now doing a fiscal union to have a similar construction for fiscal discipline as long common bonds gave the wrong incentives because you may you spend money you don't have on the bill of others and that is a wrong incentive in a functioning market economy at the end you have to pay your bills if you spend on the on the risk of others it's a temptation everyone will fail in avoiding such a temptation and therefore we have to concentrate on building the structure for fiscal and even for better competitiveness in the fiscal union we knew when we created the European currency we knew that we will build we have to build in the coming years something like a political union it's a European integration it always has always been a method going step by step if you want to start with 100% you would never have achieved one step in European interest if you go step by step what we did since the early 50s we have been in the long run we have been tremendously successful and we will be in the future successful I'm convinced that it is on the long term the better way of building something like international or global governance in going step by step in building such structures and not otherwise but as long as we have we must not give the wrong incentives and therefore it would be sent the wrong message in fighting the real causes of the given crisis I would tend to agree with Wolfgang and in my view in fact for any serious move concerning some kind of Euro bonds the necessary condition is a substantial reinforcement of economic governance of the European Union to create an ever closer economic or stability union and in fact I want to give you one example how this works because it is already moving forward we talk about the new fiscal compact next Monday that's important as a very profound political commitment of the national parliament but at the same time we have already existing secondary legislation which entered into force mid December and because of that I sent I sent early warning letters to five member states Belgium Cyprus Malta, Hungary and Poland around mid November indicating that their fiscal targets in 2012 are likely to be missed unless they take additional measures and if they do not take additional measures then we may have to resort to financial sanctions i.e. fines for the eurozone countries what happened four out of these five countries took action Cyprus twice just before Christmas very difficult discussions in the parliament cutting its deficit from about five percent to around two and a half percent Belgium after difficult discussions in the coalition government coming down from four and a half percent to two point seven, two point eight percent of fiscal deficit you see that this six pack as we call this new legislation the six pack is already working and delivering and we will further enforce this once we get the new treaty on fiscal compact in force one final comment on this I find the German council of economic advisers proposal on a debt redemption pact or debt redemption fund as very smart and potentially doable which is certainly worth exploring further it has some resemblance to the American audience some resemblance to the events in the United States of America around 1790 when the first Secretary of the US Alexander Hamilton pushed through the assumption of the state debt following the Revolutionary War and created what we could call the United States of America which by the way became the foundation of the federal economic government for the United States of America and the success of this in the past two hundred and twelve years should not be underestimated on this side of the Atlantic I want you to jump in I think that Euro bonds perhaps are the final target but I think that as Wolfgang has mentioned that we have to take a lot of steps before and that we are doing that but I would like to stress and I think that this is important the importance of the political commitment of the different member states I remember in 2003 when France and Germany bridged the rules of the stability and growth pact and I think that because of that decision we lost a lot of legitimacy to impose fiscal austerity to Greece so this is something that we cannot repeat again and I think that is not only a question of the governance the fiscal compact etc we need much more compromise and commitment from the different governments with the importance of fiscal discipline and with the importance of a common competitive approach to economic policy among the different members of the Eurozone what about in discussing the participation of the ECB should the ECB take a haircut the way the private sector would I don't think so we are discussing about the private sector involvement I think that that kind of haircut might impair the monetary mechanism of monetary policy that now is implemented by the ECB so I think that the ECB should not be involved in any kind of public sector involvement instead of private sector involvement as the private sector we are discussing with the Greek government and I hope as Oli has mentioned that we will reach an agreement quite soon I think we have the same position on the Euro bonds outside the Eurozone they are seen as the kind of philosophy of stone the ultimate answer to the international crisis the epicenter of which is the Eurozone Eurobone bonds well it means mutualising debts but doing that in countries where the main question is sovereign debt the other main question is how to fuel growth given that we have to move forward on those two tracks if we mutualise debt we don't solve the basic problem which is the creation of the monetary zone which hasn't been created in an optimal fashion what we decided in December is firstly to put our house in order that means fiscal discipline that means coordination that means convergence and that means solidarity it is the path of solidarity and that path is not Eurobone it involves firewalls now down that path when states have respected their commitments on debt the situation is stable when confidence exists without any doubt in the market then the time will be right for Eurobonds but that cannot be a solution to the crisis as it stands at the moment but rather the ultimate outcome we would like to get the audience involved and open the session to Q&A we have microphones walking around and in the meantime while we get a microphone to you I want to play a sound bite from George Suros and Minister Scherbley let me read this to you George Suros says that the on the policies out of Germany the policies Germany is pushing on the Eurozone is creating a deflationary debt spiral putting pressure on wages and profits and depresses reduces tax returns and the debt is expressed in nominal terms GDP to debt GDP declines and the debt ratio goes against you this is the trap that we are caught in today overcome the short term and this is the short term this could lead to a lost decade how worried are you about a lost decade I don't agree with George Suros not surprisingly and I would like to tell him and to tell you to tell the audience if you want to create more growth you can't deliver this only by spending more public money and increasing the deficits even in the Anglo-Saxonian economy we got the report from that if you have achieved some great of public deficit increasing deficit is counterproductive in creating growth therefore you need structural reforms and therefore we concentrate in Europe not on increasing the deficit which are even too high but in structural reforms and I was I have been finance minister since a little bit more than two years at the very beginning I was asked how will you deliver your obligations to the European pact on stability and growth on behalf of the German deficit I said my reaction was we will the government has decided to do it some months later I was criticized oh you are reducing your deficit too quickly and you destroy growth some months later in Germany growth by 3.7 in 2010 3.0 in 2011 and Tim Geidner our good friend came over to Berlin and said oh we will make American fiscal policy more German like because in Germany I don't know how it works in the United States in Germany and I think in Europe it's clear if you want to have more internal demand for investment and for consumption you have to deliver some confidence if you reduce your deficit if you make your deficit sustainable in Germany it works people regain confidence the actual figures of private consumption in Germany are very sufficient and therefore the German economic outlook is driven by internal demand and we can destroy it in increasing the deficit and we can support it and therefore we have to go for structural reforms and that is a better way we have two quick comments here from Minister Gindos and then Ole Rehn and we have a question then following just a short remark I come from the country that put in place the largest fiscal stimulus in the Eurozone from a surplus of 2% in 2007 to a deficit of 11% two years later and in Spain simultaneously to this fiscal stimulus we had the largest deterioration of the labor market that we have ever seen so I think that we should be careful in considering the implications that a fiscal expansion has on the economy because now in Spain we are having difficulties from the financial standpoint because well this fiscal stimulus was mistaken so I think that this is much more important in order to create confidence as Wolfgang Schatz mentioned to put your fiscal accounts on a sustainable path and simultaneously implementing an aggressive and ample agenda of structural reforms we are having briefly a global and long-term view on this discussion in fact inspired by Jean-Claude Trichet's wise words in one of the yesterday's discussions if you look at the previous decades and the crisis in previous decades we have the cases of Latin America in the 1980s since 1982 then we have and we have in fact the cases of several European countries in the 1990s what has been the lesson in all these cases they have taken structural reforms and reinforced the sustainability of their public finances as the foundation of solid and sustainable economic growth and as a result Latin America overall look at Brazil rather resilient even in the current global difficulties financial crisis Asia, the same story much more resilient in the current financial crisis and in Europe if you look at the countries who went through a similar kind of experience they are now more resilient in the 1980s the Netherlands and Denmark 30 years ago Denmark was almost the basket case of Europe now it is very resilient and one of the model economies in Europe in the 1990s Finland and Sweden very serious banking crisis serious problems of external balances now doing relatively well and Germany in the past decade I think this is an encouraging example of the importance and structural reforms in Europe and global. We have to get two questions in here on the second row and then I have Minister Baron first here in the second row and then I'm coming in the back. Thank you, it's Luigi Boutillon from Brevan Howard last time management. I want to take advantage of the joint presence of the Spanish Economic Minister and of Commissioner Rehn to ask them a question also leveraging of what they just commented today. I see the Spanish minister basically wants to do all he can to keep his hours in order and also hear from Commissioner Rehn that he sent five letters in the past to countries which were deviating. Now unfortunately we speak about reassurance and confidence in the market but we as market participants would like to know for instance from the Spanish Economic Minister what they're going to do to put their house in order this year. As we know on the last day of last year there was a substantial overshooting of their deficit and now we are hearing some comments which we don't find very assuring concerning the meeting of their targets of 4.4% of GDP this year. I wanted to know please if you can reassure us that this target will be strictly met and what is your opinion also Commissioner Rehn if this target should be met or it should not or because the economic condition and the related issue not. Thank you. Please. It's totally right that the new government of Spain arrived in office on December 23 and on December 26 learned that we had a sleep page in the public accounts of two full percentage points of GDP and three days after took action to reduce and to rein in the public deficit by 1.5% of GDP in increasing the taxes tax on personal revenues. Simultaneously today the Spanish cabinet is taking an action to control and to impose much more transparency on the regions that is generally regarded as one of the main sources of the deviation that you have mentioned before. So we will have much more commitment, much more compromise from the regions in terms of public consolidation of public account consolidation and simultaneously what I have to say is that the rule that we are going to have for the Spanish regions and for the Spanish entire government is going to be even stricter than the rules set in Brussels for the rest of the members of the eurozone. And finally with respect to you know your comments on the future of the path of fiscal consolidation but I have to say is that the strategy of the Spanish government is going to be based on a two pillar approach. Fiscal consolidation is not an option this is something that I have mentioned a lot of times but simultaneously we have to pay a lot of attention and I think that this is going to be vital to the banking industry restructuring and to the labor market reform. Spain is a country with an employment rate of 23% of the labor force. This is something that we cannot accept at all. And I think that this is going to be the vital element of stress and of importance and the main priority that in the agenda of the new government. I expect that over the next weeks the new government will put forward a reform of the banking industry and simultaneously an ample, profound and important reform of the labor market. How much capital does the banking industry need? This is not a question of capital. What we have seen is that there is the need of further provisioning by the Spanish banks because there is a gap between the book value and the market value of the assets, especially the real estate assets. I think it is of course regrettable that the fiscal targets of last year were missed and therefore it was very important that the new government as its first act before the end of last year took action in order to reduce the gap for this year. And I see that the actions government is planning are essential and necessary and fiscal consolidation and structural reforms are complementary of course not alternatives and it is important that Spain will meet its fiscal targets this year in order to achieve its target also next year below 3 percent and at the same time it is very important to maintain this strong momentum of structural reforms both in the banking sector as Louis referred to and also in the labor market in order to reform its institutions and its functioning because the unemployment of 23 percent and youth unemployment of 40-45 percent is something that no society can for long sustain. Very quickly Minister Baron you wanted to address the debt concern as well as growth a moment ago please do. In this debate that exists between consolidation and growth we have to reduce debt we have to do it according to a specific time scale in France we will be we will meet our targets we should be at 5.7 we will probably be under 5.5 and we will work to produce growth now we will be doing that by focusing on the cost of labor and we will be lowering the cost of labor and financing it that will be the way that France will be supporting growth Germany I'm sure will be making its contribution in another way each country will do it in their own way. Is labor reform the most important point on the agenda right now for France? Quite right. And for Germany? Minister Shebley? No for Germany I think our most important thing is to look that we have innovations in infrastructure that in place because we have increasing hesitance in public opinion in investments in increasing infrastructure for communication and so on that has to we have to discuss it we have to fight for new technologies because on the basic of our demography we have to know that we have to stick on innovation otherwise we will not be able in future to stick to the relative level of wealth and stability we have in Germany up to now we are very successful but we must not think that is granted for the future we have to stick on this and therefore it's a European matter for example we will work together for something for use employment, for use training on a European level it's quite important we can have a win-win situation if we make a European market for training young generation and something else. It seems like a luxury to be talking about investing in innovation at this very critical time in terms of deficits and austerity put in place. Look we have in reducing our deficit we have increased our our budget figures for for science, for research you have to concentrate if you reducing deficit does not mean you cut every expansion you have to look where are the investments for future and therefore we did it and we are going to do so and that's what we do in all European member states and also European level and that is the real content of the European summit on Monday. We have a question in the back, please. Thank you very much. My name is Ana Maria Coratzabil, I am a member of the European Parliament for Sweden. Last week we have voted a very clear decision on international relations and the future of the European Parliament. We have taken a decision cross political groups asking in the negotiation of the new treaty to take into consideration one the community approach two, that everyone should sit around the table. 27 plus the president of the European Parliament. Three, that European law is respected stage of the negotiation to take into account the voice of the 500 million people of Europe that we do represent and not to undermine the common institutions and keep transparency of openness of the decision-making process thank you very much. Who would like to address this? Yes please Minister. I would like to first of all I would like to give you the mobile number of David come on. Of course this is it's not a joke we would it would be much more it's much better and better to understand for everyone outside of Europe if we would do what we are now to have to do in our in our fiscal competition in the framework of the European treaties but that has to be done by by anonymous decisions that is the basic of European treaty therefore we go for the me for meantime we go 17 plus I hope plus plus nine everyone is invited to join and of course we will make we are in favor in the treaty to make who everyone who signs the treaty will take part in the decisions in the treaty and we will invite the European Parliament to take responsibility of course that is much easier on behalf of the treaties on the basic is it would be introduced in the treaties therefore on Monday we agreed in the Euro group we will be in favor to implement it in the treaty not only in five years but in three years and that I hope we can convince all our friends in the European Union only would you like to add to that well in fact I think Wolfgang Wolfgang said the essential but I want to add one aspect and I can tell John Murray that the Commission by and large sees eye to eye with the Parliament as regards the reform of of economic governance and this treaty as well I think it's very important that and largely thanks to the European Parliament the community method is fully restored and in fact even reinforced in the new fiscal compact so that once the new fiscal compact will be agreed on Monday then the Commission in the coming days will supplement the already existing secondary legislation the six pieces of legislation reinforcing economic governance which we call the six pack and we will make concrete proposals so that while the treaty is a very important the political commitment at the same time it's a concrete and practical implementation will be done through the secondary legislation which means precisely through the community method which is the method that makes the European Union to work and to deliver results we would like to take more questions but we also want to keep you on time so I'd like to thank this distinguished panel and thank you for joining us please stay tuned for the next session