Rising to economic challenges must be EU priority

Syed Kamall says Europe must face up to a dwindling share of global GDP and implement measures to restore economic growth.

By Syed Kamall

09 Sep 2014

It has been a summer of crises. As the last plenary session before the summer ended, we received the terrible news of the downing of flight MH17 over the skies of Ukraine. Then we saw the daily brutality of Isis terrorists in Iraq, the conflict in Gaza, the spread of the Ebola virus throughout much of Africa. And in the background throughout, continued jitters in the eurozone as it became clear that the dual problems of low growth and low inflation were showing up the continued vulnerability of the single currency.

We return to a number of challenges that need addressing, whether at the national, European or international level. The west's resolve is being tested from many quarters, and we must rise to these challenges. With Russian president Vladimir Putin, we must hold our nerve. Moscow's decision to retaliate against justified western sanctions was surely to be expected. Many industries will feel this pinch, but Russia will feel it far worse. We cannot allow Russian aggression to go without serious consequences.

"The continued jitters within the eurozone are partly due to unsuitable governance, but the root cause is far more fundamental: high debt and low growth"

In Iraq, the daily pictures of slaughter and barbarism from Isis have sickened us all. However, we should remember that Isis is not just an enemy of the west, but of the vast majority of moderate Muslims as well. If we have the ability to help thosepeople being slaughtered for their religious beliefs then we owe it to our consciences to try and help, whether through military operations or humanitarian assistance. The EU has no meaningful role to play in the former, but we have a significant resource to assist with the latter. Religious freedom is a major challenge across many countries, and we in the EU can take the lead in championing it.

Europe's relevance in the world can only be assured in the coming decades if we remain economically relevant. We cannot tackle the external challenges unless we also confront the internal challenges we face, by recognising that the status quo is no longer an option for the EU.

"Our ability to rise to all other challenges depends on our ability to build prosperous national economies fit to ensure our relevance in the future"

Day-by-day, the EU's share of global GDP is declining. The continued jitters within the eurozone are partly due to unsuitable governance, but the root cause is far more fundamental: high debt and low growth. To use an analogy, the reforms made within the eurozone have turned it from being a heavy single-wheeled unicycle into a heavy two-wheeled bicycle. It may have been made slightly more steady, but only as long as the bicycle is moving forward. If it stops, then we fall off. As Eurozone growth - especially in Germany - begins to stall, the bicycle grinds to a dangerous halt.
That is why we can waste no more time to take the measures necessary to restore economic growth. Many of these reforms must be undertaken at the national level, by making it less costly for companies to employ new staff, lowering taxes on wealth creation, and reforming education to build a highly-skilled workforce.

The EU can help to lift the burden by encouraging entrepreneurs and start-ups, by reducing the legislative burden on small businesses and by opening trade within the single market and with fast-rising and major economies.

The economic argument is not an isolated one. Our ability to rise to all other challenges depends on our ability to build prosperous national economies fit to ensure our relevance in the future, and our ability to protect our interests. On so many levels, we cannot afford to fail.

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