E urope’s recovery in the real economy has taken hold and is becoming self-sustaining. But this good news is still offset by the continued crisis in sovereign bond markets. In order to secure the recovery, therefore, uncertainty in the markets must be overcome.

Our most pressing priority is to break the vicious circle of unsustainable debt, financial turbulence and sub-optimal growth. Europe needs a comprehensive strategy that restores sustainable public finances through budgetary adjustment, financial repair and growth-enhancing structural reforms. Such a strategy must combine measures at the European Union and national levels.

The European Commission will present its Annual Growth Survey today, as part of this comprehensive response. This kicks off the so-called “European semester”, a new attempt to provide effective prior co-ordination of national and EU economic policies, before governments create their 2012 budgets. This will present a range of bold policies that address the problems in sovereign bond markets.