Here’s a controversial prediction for the future: by the end of the current decade, we will be able to look back on the current economic and political situation and see it not as a threat to the continued success of the European project but as the turning point that led to a stronger, more integrated, more prosperous Europe. Yes, I know it may seem far-fetched to say this given the present uncertainty, but I firmly believe that this will be the EU’s decade.
There’s an old expression – ‘What doesn’t kill us makes us stronger’ – that I think is appropriate here. These are the most testing times that the EU has seen since its very inception, and yet it is precisely because we are being sorely tested that I believe we will emerge stronger and fitter than ever before.
So why do I think this? Well, first and foremost because we have not panicked in the face of the extreme pressure on the euro zone or over the uncertain future facing Greece but instead taking swift and decisive action not only to tackle the immediate problem but, and perhaps more importantly, to put the right governance structure in place to make sure that we never see a repeat of the current crisis.
We have strengthened economic governance not only in the eurozone but in every EU Member State, we have created new firewalls and provided crucial support for Greece. We have agreed on far greater transparency in the preparation of budgets and the ongoing governance of both national and EU economies. We have proposed a raft of measures designed to bring down the current excessive deficits seen across many EU countries – measures that I am confident will leave the EU with the lowest public deficits of any global player, possibly by as early as next year.
Of course, the public face of these measures is more often than not job cuts, funding restrictions and austerity – hardly the basis, I agree, for my optimistic appraisal of where we might be in 2020.
But we are already seeing a momentum away from austerity-only measures towards a more balanced approach that places equal if not greater emphasis on stimulating economic growth and creating jobs – a momentum that I believe will carry us out right of the crisis.
So what am I basing my optimism on? It’s all in the Communication on Action for Stability Growth and Jobs adopted by the College on 30 May at the same time as our country-specific recommendations for each EU Member State. This paper sets out, in black and white, what the Commission believes is necessary for us to achieve lasting growth and sustainable jobs. But it’s not a revolution – as the Communication points out, we already have very strong bases on which to build. It’s rather a question of frontloading and accelerating the measures we have all already agreed to enhance the growth part of our existing strategy.
So what are we proposing? First, we need to complete our economic and monetary union, which in large part depends on restoring confidence in the euro, not least by finding a sustainable solution for Greece. We’re already well on the way towards this with the measures I’ve mentioned above, but it is likely that we will have to move towards deeper integration, such as a banking union, euro area financial supervision and deposit guarantees for the eurozone. All of this will of course also need strong political backing – a commitment from the Member States to the future of the euro – to give it democratic as well as economic legitimacy.
Second, we need to tap the potential of the internal market, which celebrates its 20th anniversary this year but which, in reality, remains far from complete. A rapid lifting of the blocks preventing the development of an EU-wide patent and the full implementation of the Services Directive would bring immediate results: for example, adopting the Services Directive in full would lead to an additional 1.8% increase in EU-wide GDP, on top of the 0.8% rise that partial implementation has brought. Completing the digital single market, and tackling cross-border tax barriers will also be priorities.
Third, we need to build up the momentum on job creation, especially in key sectors such as ICT, healthcare and the green economy. There are more than 3 million job vacancies across the EU that remain unfilled because of a lack of skills, and tackling this mismatch should be another priority.
Fourth, we need to make sure that Europe has the ability to fund and develop its growth-enhancing agenda. This means agreeing a new multi-annual financial framework that is fit for purpose, agreeing on the development of project bonds to leverage EU funds, targeting structural funds on growth-specific measures, increasing the paid-in capital of the European Investment Bank to allow it to continue its high level of lending and, perhaps most controversially of all, the adoption of an EU-wide financial transaction tax that could raise up to €57bn to support growth measures.
These are all EU-wide measures that will improve the overall prosperity of the Union as a whole. But there is plenty that can and must be done at individual Member State level as well – not least the implementation of the reforms that have already been agreed as part of the Europe 2020 strategy. These focus on core issues such as increasing investment in research and development, supporting education and boosting employability, particularly for young people and women.
Far from being on the verge of economic meltdown, I believe all the elements are already in place for Europe to consolidate its position as the world’s biggest economy by the end of the decade. With the measures we have already introduced, coupled with the country-specific recommendations and the pan-European proposals we adopted at the end of May, Europe’s economy will be far stronger and more resilient to potential future crises, with far greater growth potential and more sustainable jobs.
I’m already looking forward to 2020 and seeing a Europe with strong public finances, a vibrant single currency, low levels of unemployment and an internal market with no barriers to trade in goods or services. I’m sticking by my prediction: this will most certainly be the EU’s decade!