EU economy is on the road to recovery
Europe’s economy is slowly getting back on track, but the EU must give itself the means to reach its ambitious goals, writes Claude Rolin.
Claude Rolin | Photo credit: European Parliament audiovisual
The European economy is recovering, the financial crisis, which started nine years ago, is starting to fade into a distant memory, and EU policymakers all agree: Europe must go forward and take its fate into its own hands.
Nevertheless, the path to sustainable growth is not an easy one. Macroeconomic factors indicate modest growth, but the EU must still give itself the means to reach its goals in order to prosper within a competitive and ever-changing global environment.
The Union’s unemployment rates remain high, particularly among young people. In this regard, the youth guarantee, introduced in 2013, is a good example. Notwithstanding perfectible results, the policy demonstrates that commitment from the member states, coupled with financial help from the EU, yields results.
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Furthermore, Parliament’s budgets committee has recently granted the youth employment initiative an additional €500m, and calls on the Commission and the member states to ensure this amount is paid in full by the end of the year.
The investment plan for Europe, which is at its midterm point, has also yielded positive results. It has reached its quantitative objective, increased support for SMEs, and has had a concrete impact on employment. This proves that the EU is able to tackle these issues, even if accounting for legal constraints being still too great. However, support for innovation is still lacking and the EU’s potential is largely under-exploited.
The disparities between the regions are such that public and private investments must be amplified and targeted, in order to stimulate economic growth and provide exciting prospects for the 500 million European citizens. These investments must be geared towards education and research and development, so that Europe is at the forefront of innovation.
The Juncker plan relies on a lever effect to multiply investments, but it is unable to make up for a lack of funds and seems more geared towards default choices. It would be better to mobilise new capital, own-resources that do not take anything away from existing EU budgets, in favour of structural projects that have a direct impact, particularly in the fields of energy and ambitious climate goals.
In order to reach its goals, Europe needs a real budget that surpasses the negligible percentage of member states’ GDP and reinforces its innovation and autonomy capabilities.
It must also demand the respect of similar rules at international level, particularly by exceeding - as is being suggested by Parliament - the Commission’s proposals on tariffs, especially on imports from China, and ensure Europe’s capacity to produce steel. European industry - the EU’s top economic activity - needs huge ambition.
Over the last 20 years, its contribution to the EU GDP has decreased, from 19 per cent to less than 15.5 per cent. This is due in part to the financial crisis, but also because the Union, for many years, has favoured services over industry. Yet, one in five EU jobs comes from the industrial sector. Company closures all over Europe have rendered the situation untenable, both socially and economically.
Over half of European exports and 65 per cent of R&D investments are linked to industry. We need additional, common financial resources to reinvigorate EU industry. The only thing that can protect basic industry, such as the metal sector, create jobs, and jump start the economy, is a common commitment at European level.
Global competition is tough, but the EU has undeniable assets, as long as it acts as one single actor. In this regard, unfair competition and social and salary gaps between eastern and western member states are hindering progress. We must ensure the same working conditions and salary for the same job across Europe - this is at the heart of ongoing discussions on the posted workers directive.
In order to ensure healthy and fair competition across Europe, it is also important to lift the obstacles to mobility, in terms of competences and qualifications, which employment Commissioner Marianne Thyssen is currently working on.
For the European model to be an example at global level, we must enable upwards social convergence, particularly by revitalising social dialogue and including all stakeholders in discussions on strategic objectives.
Investments are not just about economic choices - they require us to think about what kind of social, environmental and human development we want for Europe and its citizens.
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