Choices for Europe By Nathaniel Copsey and Carolyn Moore with Clara Marina O’Donnell
Sluggish economic growth, high unemployment, ageing populations, climate change and security challenges on the borders of Europe have been some of the top priorities on the European agenda since the early 1990s. The EU has tried to tackle these issues, notably through its commitments to reduce greenhouse gases and its Lisbon strategy for economic growth. But the solutions offered have often fallen short, largely due to a lack of political resolve. European leaders have been reluctant to see through some of the difficult and costly policies required to ensure Europe’s future security and growth. The economic crisis that has enveloped the world will only make it more difficult for the EU to tackle many of these long-term challenges. European governments will find it harder to address the structural weaknesses of their economies in a period of recession. They also risk devoting less attention to noneconomic challenges. The single market could even come under threat – support for greater state intervention is growing. If member-states start to support their economies at the expense of others, the benefits of the single market could be rolled back. But the current turmoil also presents an opportunity for EU leadership. Voters will be looking for a positive vision amidst the crisis. European leaders should take advantage of this to put in place the difficult policies required to address not only the current recession but also the broader longer-term challenges. This paper analyses the current main challenges for the EU; explores where Europe may be heading over the next ten years; and suggests policies which the EU should implement if it 1 The paper is published ahead of wants to meet its long-term commitment to a secure and prosperous Europe.1 a conference at the University of It will cover the key policy areas which the EU must tackle: the reform of the Birmingham’s European Research single market, the expansion of the eurozone, energy and climate change, Institute on the ‘Future of Europe’ migration and demographic change. It will also consider the EU’s relations with that is taking place on May 14-15th its neighbours in the east and in the south – two regions which are likely to have 2009. It addresses the different a significant impact on the EU in the medium term. The present crisis does not policy areas which will be discussed at the conference. have to – and should not – distract Europe from its long-term priorities.
Threat to the single market There is plenty to worry those who see the single market as key to Europe’s future prosperity. First, any hope that the impact of the financial crisis on the ‘real economy’ would be limited has ended. In the face of huge falls in industrial output this year and the prospect of several years of very weak economic growth, many European industrial firms will go bankrupt. Wage subsidies and short-time working, and all the other strategies currently being employed to cope with the collapse of demand, can only be sustained for so long. EU governments are under huge pressure to intervene to protect ailing companies. The way in which they do so will be crucial. The Commission will have a real fight on its hands to ensure that competition is not distorted. It should be strong enough to enforce the rules. But member-states will have to support the Commission over the next few years. They should also ensure that the next EU commissioners for competition and the internal market have the resolve to protect the integrity of the single market.