Europe's Political Economy

Well-being 2030

The Gonzalez Report - An inclusive and prosperous future for EU citizens?

John Wyles, EPC Chief Strategy Coordinator, described the González Report as a wake-up call for European politicians to push for economic growth and internal cohesion to avoid future economic decline and political marginalisation.

Vaira Vīķe-Freiberga, Reflection Group Vice-chair, and former Latvian President, described Europe as “standing at a cusp”, as political leaders must be courageous enough to push through unpopular measures, and European citizens must be prepared to make sacrifices to build a stronger Europe. 

The Report suggests making reforms to strengthen internal security, and to control the flows of illegal immigration, and coordinate the work of EU agencies to fight international crime and human trafficking. As for external security, Europe has a poor record of joint defence capability, and while EU Member States jointly spend more on defence than the US, Europe is “not getting the bang for its buck”. 

In international affairs – “Europe is an economic giant, but a political dwarf”. It needs a common foreign policy, and a concerted political view, as in the future it will no longer be an economic super power. There is much to do but Europeans have the resources and the chances to follow this through. 

Rainer Münz, Reflection Group Member and Research Director at Erste Bank, said that unless Europe takes measures, it is in danger of going into decline during the 21^st century. It should use the European Economic and Social Model (EESM) to create an economy based on a well-trained workforce with a high-value chain of goods and services, develop its further education facilities and encourage private industry to invest more in research. 

By 2050 50% of Europeans will be over 50, so we need to bring more older people, women and oversees workers into the workforce. 

Better economic coordination is needed to enable a common European market and currency to function properly, creating better economic coordination between EU Member States. In terms of defence, Europe needs to concentrate on projecting its military power much further abroad. 

Pervenche Berès, Chair of the European Parliament Committee on Employment and Social Affairs, hoped the recent financial bail-out package was a real step forward in economic government, rather than just an ad hoc measure. She noted that the Lisbon Treaty introduces a “toolbox of measures”, which we need to learn how to apply. 

At present Europe only has a monetary union, not a full economic union, which has caused “disequilibrium in the state of the euro” between Member States, so a full fiscal strategy is needed to correct this. 

Fabian Zuleeg, EPC Chief Economist and Senior Policy Analyst, said we need to consider the best action to solve the economic problems at the European level, as while policy-makers have known about structural problems associated with the euro, they failed to take EU-level action to solve them. 

We need to be more ambitious and to talk about fundamental change at the European level, and the EU needs to take a more proactive approach and to address the growth crisis, because if growth continues at its current level it will not produce sufficient wealth to repay government debts brought about by bailing out financial systems.