Chief Economist´s Comment | Sep 11, 2017
Chief Economist´s Comment
Trenchant observations direct from the pen of Dr. Gertrud R. Traud, Chief Economist and Head of Research.
The European Union - the success Story goes on
There are issues that almost everyone takes pleasure in criticising. This usually applies to things like office canteens, public transport and the European Union (EU). In the run-up to the decision by the British to withdraw from the EU, aversion to the latter moved up yet another gear. Now, more than a year later, and the tables have turned. The British seem to have no clear Brexit plan and the other 27 EU states are presenting a surprisingly united front.
This does not, however, apply to the question as to what the future of the EU should look like. Bearing in mind that - notwithstanding all the criticism - this organisation is a success story, it is worth confronting the fundamental issue of its future development. This is exactly what the EU Commission has done, just in time for the 60th anniversary of the signing of the Treaty of Rome. In its March 2017 “White Paper on the Future of Europe”, it presented five different strategies.
In respect of co-operation between member states, the range of proposals extends from “business as usual” to “all change”. It is as clear as day that maintaining the status quo (strategy: “Carrying On”) is not really an option. Even focusing on nothing but the Single Market is probably not a viable alternative either, considering the pace of change on financial markets as well as the significance of the euro as a global reserve currency and in light of the 2008 financial crisis, the consequences of which, to some extent, can still be seen today. Equally, “Doing Much More Together”, the most ambitious strategy, entailing both faster decision-making processes and a more decisive implementation of policies as well as the Union making more rapid progress in various policy areas at the same time, appears to be neither feasible nor desirable as a counterpart to “business as usual”. It may well be appropriate as a vision and guiding principle to show where the journey might lead; but there is a danger that people will view this as a kind of “forced Europeanisation” and that, at the end of the day, the resulting centrifugal forces will tear the European project apart.
Two strategies that the EU Commission has put forward, which either put the emphasis on more variety, efficiency or selected co-operation, depending on their respective focus, are particularly welcome. The strategy entitled “Those Who Want To Do More” seems to be the most promising option that would allow for one or more groups of countries to forge ahead in individual policy areas and work on fields of common interest in which the EU could make further progress.
The strategy called “Doing Less More Efficiently” could also lead the way, although the EU member states would have to find a consensus in policy areas in which they want to intensify their co-operation. So far, experience of this approach has shown that there is a risk of it being doomed to failure from the start.
Regardless of what strategy is chosen, the EU will have to be developed along a common thread: rules must be adhered to, the burgeoning jungle of regulations must be pruned back, there must be a rethink on the acceptance of transfer payments and structural funds and the fundamental principle of the EU – that of subsidiarity – must be preserved.