Coronavirus has fundamentally altered the economic and social environment for billions of people around the world. The tragedy of this immense human loss has been compounded by significant economic dislocation and severe social strains, arising from the required public health restrictions. As a result, the broader economic response of the EU to the pandemic (with the exception of direct healthcare priorities) must now focus on a considerably longer time horizon.Economy Eurozone Growth Macroeconomics
A Marathon, not a Sprint: A Six Point Plan to Build Confidence, Create Jobs and Repair Public Finances
22 Oct 2020
For policymakers and politicians, it’s easy to discount the millennial generation as lazy, footloose and obsessed with social media. In Italy, a whole generation are now derided as bamboccioni (big babies) who prefer to lounge at home with their aged parents, rather than embrace a more financially independent lifestyle. But such easy stereotypes belie a much harsher economic reality. And nowhere is this despondent realism more evident than in an Italy seemingly on the verge of perpetual economic and societal collapse.
Italian millennials (those born between 1981 and 1996) have confronted the 2008 financial crisis and the ongoing Corona crisis. But even these crises are mere bookmarks in the longer story of Italian economic fragmentation which began with the recession of the early 1990s. This is a stagnation which has already resulted in a whole generation of young Italians being without steady employment, bereft of economic independence and increasingly without hope for the future.
This millennial disenfranchisement has caused frustration, distrust of government and a tendency to vote for populist parties. This is a society where young women are still exposed to the ridiculously discriminatory and illegal ‘dimissioni in bianco’ (blank resignation) letter which allows employers to dismiss workers on account of any future pregnancy or marriage. An economy where the richest 1% of Italian adults increased their share of total personal wealth from 17% to 24% in the two decades up to 2016 notwithstanding a stagnating economy.
Although Italian millennials are more educated and skilled than their parents, two out three workers with a short-term contract are under forty. As a result, young Italian adults are poorer than the previous generation. A 2018 study showed that Italians in their thirties earn 17% less than their parents did at the same age. This had led to reluctance to start a family (Italy has one of Europe’s lowest birth rates) and a gradual decline in the size of the traditional middle class.
Closing this dichotomy – between the struggling younger generations and their often affluent parents and grandparents – is the biggest obstacle to fundamentally rebooting Italy’s economy.
But to give millennials a fighting chance at success means confronting two bedrocks of Italian society: an antiquated education system and a reorientation of political power away from well-heeled middle-aged and retired Italians.
The Italian education system is exacerbating millennial struggles. Highly theoretical and based on the acquisition of general background knowledge but few practical skills, the Italian teaching system at the post-primary level is not attuned to the realities of the 21st-century labour market. The results are either abstract or controversial. Italy (the third largest economy in the EU) has no university in the top 100 globally. This compares to eight from Germany and seven from the Netherlands.
Closing this dichotomy – between the struggling younger generations and their often affluent parents and grandparents – is the biggest obstacle to fundamentally rebooting Italy’s economy.
Perhaps even more importantly, giving young Italians a fair opportunity at economic independence requires challenging the stranglehold on policymaking held by older Italians. Italy has become the Florida of Europe with the conservative (and often regressive) economic policies to match. The oldest population in the EU (22% of Italians are aged over 65) benefit disproportionally from a welfare system designed to protect their interests over all else.
Over 77% of public social spending in Italy goes to retired people while only 3% of total expenditure is targeted on working families and children. Remarkably, Italian retirees enjoy the highest net pension replacement rates in the EU (nearly 92%) notwithstanding Italy having the largest public debt in Europe.
It’s a retirement heaven for older Italians. But it’s deliberating sabotaging the prospects of millennials. It is also – very obviously – totally economically unsustainable.
A country famous for putting family at the heart of society is in fact dressing up this wealth grab as a continuation of traditional norms. Witness the mass hysteria when former Prime Minister Mario Monti attempted to reform the unaffordable public pension system in 2011. The reforms were subsequently rolled back and the Italian retirement gravy train (just like Snowpiercer) is still speeding around and around the tracks.
So what can Italian millennials do?
The first thing is to realise that neither a naive EU nor its much-heralded Economic Recovery Plan will save Italy. Such initiatives will only facilitate existing Italian policymakers clinging to power while the money flows from Brussels. Tens of billions of euros of investment in combatting climate change and digitalisation, while very welcome, will change nothing if more deep-seated structural reforms are ignored.
Second, Italian millennials should refuse to accept the current status quo as the only available path for Italy. This will mean confronting the older generations (including parents and grandparents) about the illogicality of such generational inequality. It means the young need to inject a sense of urgency and positive disruption into their approach to mainstream politics. It’s time for a productive movement of change that is not just the same old negative messaging stuck on repeat. For all the noise they generate groupings like the Movimento delle Sardine (Sardines Movement) are devoid of tangible reform proposals.
Italy needs a generational awakening dedicated solely to pursuing the interests (and rights) of young Italians. Unburdened by history and unfettered by the conservatism of wealth preservation, this movement should work towards fundamental economic and social reform by working for young Italians across the political spectrum. Only then will Italian millennials have a fighting chance.
Existing politicians are incapable of reforming Italy because that would mean compromising their own tightly held privileges. That’s why only its ‘big babies” can save Italy now.
Only its ‘big babies’ can save Italy now
20 Jul 2020
Gender equality is one of the core principles of the EU. This is set forth in, for example, Article 2 of the Treaty of the European Union. Equality between men and women includes equality in the labour market. However, this equality is far from having been achieved. Building on our forthcoming research for the Martens Centre, we explore in detail four factors that may explain the gender gap in labour force participation across countries. These factors are education, taxation, the provision of childcare, and cultural and historic norms. In discussing these factors, we focus on case-study countries which represent different regions and feature diverse institutional characteristics: Germany, Italy, Poland and Sweden.
Through this analysis we propose four policy actions designed to place gender equality in the labour market at the heart of a growing European economy. These are (1) the promotion of better work-life balance (2) embedding equality in national tax systems (3) tacking gender stereotypes through education and (4) understanding the benefits of long term investments for long term gains in terms of equality policies. To conclude, we acknowledge that it is preferable to implement policies that are tailored towards the institutional and cultural settings in each country and to specific groups of workers. Thus it is important that gender policies should be established at the national level. Rather than seeking to expand its competencies in the areas of education, taxation or social policy, the EU should focus on setting overall objectives.Growth Jobs Macroeconomics Social Policy Society
Women in a Man’s World: Labour Market Equality Driving Economic Growth
22 Oct 2018
Last week’s Social Summit for Fair Jobs and Growth, also known as the Gothenburg Summit, was a success. Commission President Jean-Claude Juncker obtained the endorsement of the Heads of State and Government to his proposed Pillar of Social Rights, while the Swedish presidency promoted at the European level a theme that is at the heart of the Swedish model back home.
The EU has started a difficult process of reflection on how to reorganise itself as a successful multilevel union in the next decade. It is therefore only natural that its possible future role in social policies should be carefully considered. I would like to make three points which seem to have received little attention in the debate so far.
The EU welfare we already have
First, in anything but name there is already an embryo of EU welfare, albeit a very dysfunctional one. The Common Agricultural Policy makes up around 40% of the EU budget, and in essence it is a programme of income support to farmers explicitly designed to grant them a safety net. The ground for this policy to be so sizeable – in fact the ground for it to exist at all, at least at the European level – is far weaker than it was fifty years ago, but here we are.
The Common Agricultural Policy is in essence a programme of income support to farmers.
Cohesion policy – another big item in the EU budget – is strictly speaking not a welfare programme, as it addresses inequality between regions, as opposed to individuals, but it has redistributive effects. It has financed many worthy projects in the EU’s poorest regions – sure, many unworthy ones too – but it seems to have miserably failed to foster convergence.
Then there is the European Social Fund, which is modest (10 billion) but it exists, and that’s its main merit. It would be useful to see these programmes as elements of EU welfare – perhaps suboptimal and in need of reform – but to be included in an overall debate on social Europe.
The two fundamental weaknesses of the European Pillar of Social Rights
Second, there is now a European Pillar of Social Rights (EPSR). Its twenty principles are structured around three broad goals – equal opportunities and access to the labour market, fair working conditions and social protection. A scoreboard will be used to assess the relative performance of Member States (MSs) against these principles under the European semester, providing a solid governance framework to encourage the achievement of the set goals.
As with many similar EU ideas, it is interesting and well-structured. As with most similar EU ideas, it suffers from at least two fundamental weaknesses. To begin with, there is a clear abuse of the rhetoric of rights, sadly common to so much contemporary public policy.
What does it exactly mean to say, for example, that ‘young people have the right to continued education, apprenticeship, traineeship or a job offer of good standing within 4 months of becoming unemployed or leaving education’?
Or that ‘everyone has the right to timely and tailor-made assistance to improve employment or self-employment prospects’? Whose obligation is it to grant those rights? And who’s going to enforce compliance if, for example, a young person does not receive ‘a job offer of good standing within 4 months’?
When words still meant something, every right had a correlative obligation.
When words still meant something, every right had a correlative obligation which was legally enforceable and backed by public powers. This is clearly not the case anymore. Now declarations of wishes and desires whose realisation is largely beyond the reach of public authorities are solemnly proclaimed as ‘rights’, inevitably fueling popular and populist anger when it becomes clear that they cannot be enforced.
The second weakness of the pillar is all political. As the inglorious Lisbon strategy and the – admittedly more glorious – Europe 2020 strategy, the EPSR is largely made up of non-binding commitments by MSs within what was once called an Open Method of Coordination (OMC), i.e. a soft governance system that tries to foster convergence through peer pressure, benchmarking and supranational monitoring.
True, the EPSR will be more institutionalised than previous instances of OMC, but the essential political point is the same: once more the EU is committing to a grand vision of something – social Europe in this case -, without having the slightest control over the means and initiatives necessary to deliver it, which largely remain in national hands.
If there is any success, it will be a national success. If there is no progress, it’s the EU that will have proved to be ineffective. Nothing new under the sun – well, the clouds – of Brussels.
It’s subsidiarity, stupid!
There is a final, important point that deserves close scrutiny. Bluntly put: I suspect that arguments for social Europe are ultimately bound to be arguments for harmonisation – possibly for total harmonisation – and against subsidiarity.
To illustrate my point, let me take the one piece of European welfare that seems to make most sense in the EU context: a federal unemployment insurance scheme. This sounds very plausible and sensible, as it would provide much needed automatic stabilisers in a very suboptimal currency area constantly exposed to asymmetric shocks. But, as always, the devil is in the details. Unemployment is not only a function of the economic cycle but also of domestic policy factors. As long as national policies differ, any federal unemployment insurance scheme is bound to subsidise bad policies in countries with high unemployment, at the expense of countries with good policies and low unemployment.
As with many similar EU ideas, the EPSR is interesting and well-structured. As with most similar EU ideas, it suffers from at least two fundamental weaknesses.
The only way to eliminate the differentiation created by domestic policy choices is – logically enough – to eliminate domestic policy choices, i.e. to progressively harmonise social and labour market policies through binding benchmarks at the European level. Unsurprisingly, such benchmarks were supported for the long-run by the five presidents’ report of 2015 and featured as one scenario – perhaps the favourite scenario? – of the recent Commission’s reflection paper on the social dimension of Europe.
To summarise: social Europe deserves to be seriously discussed in the context of the future of Europe debate. When doing so, let’s remember to include in this discussion EU social policies that already exist, as well as to go beyond mere symbols and rhetoric.
Most importantly, let’s remember that in a union of states that wish to retain their identity and policy differences, arguments for social Europe cannot be made on purely technocratic ground. They must be assessed against an overriding commitment to subsidiarity.Federico Ottavio Reho Education Growth Jobs Social Policy
Federico Ottavio Reho
The social Europe no one is talking about
22 Nov 2017
At present the biggest threat to the monetary union is posed by the anti-European political parties. These parties call for their countries to leave the union. They are thriving especially in countries with slower economic growth and high unemployment rates. The best remedy against them is to increase economic growth and thus reduce the unemployment rate in their home countries.
The measures taken to achieve this need to be systematic, rather than merely temporary patches. In peripheral and semi-peripheral economies, undercapitalised banks and the lower competitiveness of domestic producers are slowing down growth. The correct measures to address these problems include banning dividend payouts by undercapitalised banks and creating minimum standards for competitiveness.
Read the full article in the June 2017 issue of the European View, the Martens Centre policy journal.Ivan Štefanec Eurozone Growth Jobs
How to ensure the survival of the monetary union
20 Jun 2017
Events in recent years have put the European economic integration project and the euro under pressure. The main cause of the euro crisis is loss of competitiveness, particularly on the periphery of the Economic and Monetary Union. To reverse this, Union members must promote structural reforms that increase long-term employment, productivity and external competitiveness.
The successful implementation of reforms, however, requires sufficient public support, which in turn presupposes measures that support demand during the implementation of reforms. To that end, important steps include taking an expenditure-based approach to fiscal adjustment and the introduction of the European Deposit Insurance Scheme.
And for Greece in particular, the set of necessary steps includes taking ownership of reforms, the downward revision of fiscal targets, and medium- and long-term measures of debt relief conditional upon meeting fiscal/reform targets. Finally, the stability of the euro hinges on the moderation of all fiscal and external imbalances across all member states, regardless of whether these imbalances are apparent or not.
Read the full article in the June 2017 issue of the European View, the Martens Centre policy journal.Michael G. Arghyrou EU Member States Eurozone Growth Macroeconomics
Michael G. Arghyrou
Structural reforms in the euro area: a Greek view
24 May 2017
This working paper looks at recent trends in the Russian economy after more than two years of recession. It analyses the fundamental reasons for the current economic crisis and argues against some of the mainstream views on ‘the end of the recession’ and the role of Western financial sanctions. The paper follows up the author’s publication on the same topic which was published by the Wilfried Martens Centre for European Studies in December 2015.Crisis Economy EU-Russia Growth Macroeconomics
The Russian Economy: Recovery Is Further Away than Some Might Think
12 Feb 2017
The free movement of persons, goods, services and capital is the basis of the European Single Market. It is one of the most successful achievements of European Union, bringing jobs to the European citizens and growth to the European economy.
The four freedoms were enshrined in the 1957 Treaty of Rome, laying the groundwork for a functioning single market, since then, however, technological progress has changed our economies. How can the European Single Market adapt and keep pace? With a 5th freedom: the free movement of data.
A fifth freedom?
The concept of a 5th freedom was coined by, Janez Potočnik, former European Commissioner for Science and Research, in April 2007 by calling for the ‘freedom of knowledge’. He aimed to improve Europe’s ability to remain competitive in terms of knowledge and innovation, as ’the cornerstones of prosperity’, he argued.
In this blogosphere, Bruno Maçães, former Portuguese Secretary of State for European Affairs, defended the freedom of knowledge by proposing reforms to transform the single market. He called this ‘knowledge mobility’, considering the rapid and borderless nature of the digital economy.
Freedom of knowledge and knowledge mobility can be achieved with the free movement of data.
The new fabric
Data is the raw material in the digital world, a good with major socio-economic value which can unleash the potential of the data economy expected to reach € 566 billion by 2020 (European Commission). It is a key driver for increasing Europe’s competitiveness and economic growth in order to ensure the continued well-being of EU citizens as they face the challenges of globalisation.
90% of today’s global data has been created in the last two years alone. And data will keep on growing. Data is produced largely by people while interacting on the internet — foremost via pictures and videos, as well by an ever-increasing number of connected devices, such as smartphones and sensors (a.k.a. the IoT – Internet of Things), which gather climate information, satellite imagery, GPS signals, and much more.
When analysed, all this data represents a land of opportunity. It has the potential to transform raw data into useful information to build up knowledge, and to enable that knowledge to utilise higher orders of intelligence in all sectors of society. It can bring greater efficiency and productivity to services, lowering delivery costs. It can create new and innovative services and business models, making the digital economy a major driver for growth and jobs. It can help us solve major societal challenges. It can even be used to make governments more accountable, more transparent and better at policy-making.
DIKW Pyramid (Ackoff)
But are we letting data move freely in Europe like we do for persons, goods, services and capitals? What can the free movement of data bring?
Let’s take the example of a self-driving car. The car receives data from a traffic light that has turned red. This is then processed: the red traffic light is identified as a stop signal. But what happens if data cannot move freely among connected devices (in this case, between the traffic light and the car)? Or what happens if the car crosses a national border?
Consider another scenario. have you ever been to a doctor while abroad? You are seated opposite the doctor, but your medical records remain at home. This can lead to a tricky situation, besides the difficulty of being ‘lost in translation’ between the foreign language and medical lingo. But if the doctor can access your medical history, this whole process can be facilitated and a more informed decision can be taken.
The European Commission, in its Digital Single Market Strategy, identifies the economic and societal growth potential of data technologies such as Big Data, Cloud Computing and the IoT.
After the European Cloud Initiative, the Digitalisation of Industry Initiative and the Internet Connectivity Package, the Commission is due to present the European ‘free flow of data’ initiative. It will tackle restrictions on the free movement of data and on the location of data for storage or processing purposes. It’s been said that by removing data restrictions, the EU could generate € 8 billion per year in GDP.
This initiative should balance societal and economic benefits. It should address, properly and clearly, data ownership, liability and portability (encompassing confidentiality, availability, privacy and integrity) in order to achieve trust.
The four freedoms opened many opportunities in the European Single Market, increasing the well-being of European citizens. With the freedom of data, we will not just keep pace but power greater innovation. And innovation is the only way to grow.
We must take the lead in unleashing the potential of data and in rooting our values and standards in today’s globalised and competitive digital economy.
The ‘free flow of data’ initiative may well be just the first step; to go further, we must show political leadership and vision: to add and open when reactionary forces push to remove and close.
By creating more barriers to the free flow of data, as a protectionist reaction, we are not increasing security. The centralisation or the closing of the data is as interesting for hackers as a honey pot is for bees.
So, in order to enable the Single Market to truly go digital, we must add a 5th gear to our engine. To fuel this, Europe must add to its core freedoms the free movement of data.
Ackoff, R. L., (1989) “From Data to Wisdom”, Journal of Applies Systems Analysis, Volume 16, pp 3-9.
Bellinger, G., Castro, D., Mills, A., (2004) “Data, Information, Knowledge, and Wisdom”, System-thinkingGonçalo Carriço Growth Technology Values
Does the EU need a 5th Freedom?
11 Jan 2017
2016 has been marked by a return of uncertainty in the financial markets and increased doubts over growth prospects in key global economies such as China, Europe and the U.S. Nearly ten years after the U.S. sub-prime mortgage crisis first erupted, the global financial sector has returned as a key concern of economists and global investors.
This note identifies four key issues underpinning the current market turbulence. It argues that although these challenges are varied and serious, they are not insurmountable for Europe owing to the reforms undertaken since 2008.
However, in order to prevent regular cycles of market speculation further economic reforms are necessary which will challenge existing national preferences and change the governance of both the European and global economies.
Ultimately, for Europeans, the goal of these reforms is to lead to a more cohesive and robust European Union. However, the failure of the EU to act in a timely (and collaborative) manner will result in further periods of speculation.
Four policy priorities – increased investment, further global cooperation, the completion of Banking Union and the maintenance of sustainable public finances – are identified as being necessary for the EU to withstand future financial crises.Banking Crisis Economy Growth Macroeconomics
Financial Market Instability: A Four Point Plan to Avoid Economic Catastrophe in Europe
02 May 2016
Unsurprisingly even within the “Brussels bubble” economists cannot agree on the ultimate result of President Juncker’s European Fund for Strategic Investments (Juncker Plan). The mobilisation of additional funding mechanisms – over and above agreed national and EU frameworks – has caused unease with those who have prioritised budgetary consolidation as an immediate policy imperative.
In this debate Germany holds the most important role as Europe’s strongest large economy in 2016. However, this note highlights that fiscal balance and increased investment are not mutually exclusive political actions, but rather form important elements of a sustainable economic policy framework. This is vitally important for all member states, but particularly for Germany, in light of its challenging long term economic outlook.Economy EU Member States Eurozone Growth
Germany and the Juncker Plan: 3 Steps to Reconcile Fiscal Consolidation and Investment
16 Feb 2016
“We have stabilized the Euro and carried out reforms. Now we need to focus on innovation for growth and the digital economy.”
These are the words used by Manfred Weber, leader of the European People’s Party (EPP) Group in the European Parliament during his opening of the Economic Ideas Forum that was held in Brussels on December 2nd 2015.
The Economic Ideas Forum (EIF) is an annual high-level conference that brings together economic experts, decision makers and business leaders to discuss and consider innovative ideas and solutions to the economic challenges facing the EU today. The Forum has so far been a roadshow affair, with previous editions successfully held in Bratislava, Helsinki, Dublin, London and Madrid. Organized by the Wilfried Martens Centre for European Studies, the official think tank of the EPP, the EIF’s aim is to act as a laboratory for policy-oriented ideas.
Here are the seven key takeaways from the one day discussions:
- Digital Single Market (DSM): You snooze, you lose
The Commission’s plans for a Digital Single Market featured prominently in the discussion and all speakers agreed that their successful implementation could be agame-changer for the future of the digital economy in Europe. According to one speaker, some EU member states still need to wake up from their “digital snooze”, otherwise the EU will continue to lag behind in digital innovation, most notably in comparison with the US. One big market, rather than 28 different ones will make Europe an investment and digital-friendly continent.
- Industry 4.0: Embrace, don’t erase
As the birthplace of the industrial revolution, Europe has long relied on its industrial eco-system as a core economic strength. But the relative contribution of industry to the EU economy is declining. In response, we need to activate a new industrial revolution: we need to transform industrial production through the merging of digital technology, the internet and conventional industry.
In an era where users take the driving seat, and the economy becomes an “on demand” one, including the personalization and digitalization of products, the EU needs to provide a co-ordinated response on how to embed innovation at the core of Europe’s industrial sector.
- Collaborative economy: Disrupt yourself
Revolutionising our economies and work habits, that’s no modest ambition set out by the new, dynamic players that are part of the so-called collaborative economy. How about the more traditional players that are challenged in the process? They can use this as an opportunity to disrupt their own business models by adapting and borrowing practices from the newer players. This will lead to growth, lower prices for the consumer and increased efficiency in the utilization of resources.
- It’s the (data-driven) economy, stupid!
All the digital innovations discussed raised complex issues of data treatment, storage and protection. There was a general agreement that a balanced deal on data protection is a necessary prerequisite for the digital economy to fully accelerate in Europe. On the issues of data flows and “safe harbor” the temptation to build walls around Europe should be avoided.
- Energy Union: Don’t rush to Russia
In the energy field, speakers agreed that the objectives are security of supply, climate protection and the reduction of energy costs. The EU has gone a long way towards having a common policy to achieve these goals, but further steps will still be needed. Tackling the overreliance of some EU countries on external supply (i.e. Russian gas) can be achieved through a better connected European energy market, a stronger energy union and intelligent diversification.
As for the latter, agreement on the importance and role of renewable energy sources was mixed with an acknowledgement that other complementary solutions should also be considered, including nuclear power.
- COP21: Leader, not lonely front-runner
With the EIF taking place just before the Climate Change Summit, the timing was right to underline that what was at stake in Paris was the future of Europe as a leader in clean energy. If an agreement was not reached, Europe could turn into a “lonely front-runner”, shouldering a disproportionate part of the burden in fighting climate change and losing its competitiveness to countries with laxer standards.
- Ukraine: Remain Calm – now reform and support
The need for diverse and comprehensive reforms in Ukraine was best summarized by a speaker that urged for a “Maidan in government structures”, as well as de-regulation, privatization and an independent judiciary. In this, Ukraine should value the experiences of centre-right reformers from Central and Eastern Europe during the 1990s. In turn, Europe needs to avoid that Ukraine falls off the EU agenda and offer concrete rewards to encourage the reform process in the country, such as the concrete prospect of visa liberalization.
Closing the event, Martens Centre Executive Director Tomi Huhtanen told the audience how, in previous years, “financial crisis” and “economic recovery” were the topics dominating the EIF discussions. This time around, new buzzwords such as “collaborative economy”, “industry 4.0” and “data-driven economy” took over the conversation.
In a world where change seems to happen at an exponentially growing pace, 2016 is no doubt going to bring new, disruptive trends for the European economy. The Martens Centre will be there to discuss them as they happen, with a continued appetite for new ideas and concrete policy recommendations.Economy Energy Growth Innovation Trade
Economic Ideas Forum, inspiring ideas into policy action: 7 key takeaways
10 Dec 2015
The gurus of the economic left are at it again: in ‘a plea for economic sanity and humanity’, a group of progressive economists led by Joseph Stiglitz and Thomas Piketty published yet another letter to condemn the austerity allegedly practiced on Greece. The initiative follows an earlier plea published in January against ‘the dogmatic insistence on debt repayment in full regardless of the social and political consequences’.
The distinguished signatories insist that ‘to condemn austerity does not entail being anti-reform’, and that ‘austerity’ actually undermines Syriza’s key reforms, namely its efforts to overcome tax evasion and corruption: ‘Austerity’, they explain, ‘restricts the space for change to make public administration accountable and socially efficient’. This is surely a scientifically and politically respectable perspective. But let me make some points from a different one.
First of all, let me contest the appropriateness of the term ‘austerity’ for what we have witnessed in the last years in the periphery of Europe. One would think that a person is austere when she is thrifty and saves part of her income, namely she spends less than she earns. Under this common sense definition, austerity is a virtue (yes, a virtue!) virtually unknown to all European governments. They all spend way more than they receive in revenues, and most of them have been consistently doing so for decades!
The fact that public opinions can seriously regard the attempt to curb overblown fiscal deficits and to slow down an accumulation of public debt unprecedented in the history of modern economics as ‘austerity’ is a clear sign of the dismal progressive spell which we’ve all been living under since WWII.
Second of all, the claims of the anti-austerity crowd are even more dubious when we move from Europe in general to Greece in particular. The idea that EU-inspired adjustment programmes forced Greece to adopt an otherwise unnecessary ‘austerity’ policy is a gross misrepresentation of what actually happened. Nobody said it better than CEPS Director Daniel Gros in a commentary last February:
‘it is disingenuous to claim that the troika forced Greece into excessive austerity. Had Greece not received financial support in 2010, it would have had to cut its fiscal deficit from more than 10% of GDP to zero immediately. By financing continued deficits until 2013, the troika actually enabled Greece to delay austerity’.
Exactly, from more than 10% of GDP to zero IMMEDIATELY. As explained in this post by IMF Chief Economist Olivier Blanchard, what is being consistently rejected by the Syriza government now is a primary budget surplus target of 1% in 2015, not exactly the ‘fiscal waterboarding’ one may expect when reading the recurrent progressive pleas for forbearance and debt relief.
Third of all, I would argue – together with many conservative economists – that the much decried austerity is nothing less than an instrument of economic liberation. Contrary to the fallacy constantly spread by progressives, austerity is not primarily about cutting, but about transferring. Specifically, it is about transferring control over productive resources from bureaucrats to individuals and companies.
Austerity does not simply mean balancing the budget by doing ‘whatever it takes’. It means balancing the budget as part of an overall reduction of public expenditure that allows people to keep more of their income and to freely decide how to spend it, instead of having government bureaucrats decide on their behalf.In other words, true austerity returns to people what rightly belongs to them and was unduly appropriated by the state in the last century of progressive drunkenness. It enlarges the scope of individual freedom and choice in our society.
Furthermore, far from restricting ‘the space for change to make public administration accountable and socially efficient’, austerity forces public administrations to limit their notorious wastes, to optimise their utilisation of scarce resources and to become more efficient.
In conclusion, the most legitimate criticism against austerity in Europe is probably that it has not really happened. Although the emphasis of ‘the institutions’, as they are now amusingly called, on balanced budgets was sound, the need for a radical restructuring of the social model that has generated Europe’s over-indebtedness was never recognised.
As we know, spending on education and health consumes 10-15% of the national income of developed countries, while replacement incomes and other transfer payments account for another 15-20%. Compared to the resources that could be freed by reorganising the provision of these services along more competitive lines, the savings imposed by the most draconian European programmes of adjustment are just cosmetics.
As long as the need for a profound paradigm change is not understood in Europe, progressives will keep attacking conservatives for imaginary misdeeds, conservatives will take the blame for policies they have never dreamt of, and common citizens will continue to suffer under the oppressive weight of a wasteful and bureaucratic social model.Federico Ottavio Reho Centre-Right Economy Growth Macroeconomics Political Parties
Federico Ottavio Reho
Austerity never happened
17 Jun 2015
The creation of jobs across Europe remains a key economic and social challenge for the EU. Given the negative impact of the financial crisis on European citizens, the EU’s ability to promote effective job creation policies will be viewed as a major success of the wider integration process.
In this context, a new approach is required to provide a growth-based strategy for creating employment across Europe. What is required is an achievable strategy based on the realities of modern EU labour markets. This research, based on an analysis of six member states, provides a set of recommendations designed to reflect the current characteristics of the EU labour markets. This research concludes that:
- EU employment policies should be simplified and better coordinated;
- Clearly defined action s should be introduced to further improve labour mobility;
- The focus of policymaking should be switched from combating unemployment to creating jobs;
- It is possible to finance the recovery by bridging the gap between investment and reform.
It’s Our Job: Reforming Europe’s Labour Markets
04 May 2015
As I write, it remains unclear whether Greece will reach an acceptable deal with its creditors, who are mainly other European Governments.
It is important to say that the recession in Greece has been much deeper than expected by those who agreed the original bailout package with Greece in 2010, a 25% fall in output as against a predicted 7% fall. The budgetary adjustments have also been bigger than in any of the other bailout countries.
It must be acknowledged that, when Greece got a bailout from the other Governments and the IMF, the ultimate beneficiaries included banks, not only in Europe but also elsewhere.
These banks had been lending to the Greek Government, long after they should have stopped doing so, and have forced Greece to confront reality. They assumed that, because Greece was in the euro, someone somewhere would ensure they were repaid.
Yes, some the banks, who were thus saved from their errors by the bailout, were indeed German. But many of the banks who were rescued from their embarrassment were British and American, and the British and American taxpayers have avoided a proportionate exposure to the costs, through the Greek bailout, of saving THEIR banks!
The Euro zone is bearing the main burden, while the others offer free advice.
That said, it would have been in nobody’s interest, for a panic about Greece to have infected banks around the world. Bank credit constitutes 95% of the money we use, and a collapse in confidence in money could have had really devastating global consequences. Without confidence in banks, economic activity would have come to a shuddering halt.
We would have had a crash, rather than just a crisis. Hindsight critics can ignore that now, but it was a real risk then.
The origins of the Greek problem are very deep and longstanding. For years, Greeks had been consuming more than they were producing, retiring on pension earlier than is normal in other countries, and running an educational system that had few links with the real economy. All these gaps were bridged by borrowing money from foolish investors, who averted their eyes from the profound underlying problems of the Greek economy.
Meanwhile Greece supported a cumbersome and slow courts system, and an equally inefficient system of public administration and of regulating entry to professions. These systems got in the way of growth, because growth needs a capacity to move human and other resources quickly from less, to more profitable activities. Such systems might have been affordable in a very rich country, but Greece never was a rich country.
Meanwhile Greece failed to develop a broad modern industrial sector. It relied too heavily on tourism and ship building. Greeks made money selling things to other Greeks, rather than to the rest of the world.
Greek businesses stayed small, not big enough to become exporters. Indeed the proportion of micro businesses in Greece is very large, and this sort of business frequently under declares its income for tax purposes. This is part of the reason for poor tax collection in Greece.
There is growth potential in the Greek economy
A McKinsey study back in 2011 suggested, for example, that Greece could develop medical tourism (it has a large population of dentists). I met someone recently who was waiting for ages a treatment for tonsillitis in Ireland, who went to Greece, and had the operation done in days. McKinsey suggested big scope for Aquaculture and food processing in Greece. Greece could develop its port infrastructure to provide a regional cargo hub.
But none of these things can be financed unless Greek business people have access to a healthy banking system.
The Greek banking system is far from healthy. Its capital is tied up in Greek government bonds. The credibility of these bonds has been called into question by the brinkmanship and loose rhetoric of the new Greek government. The uncertainty over whether Greece will still be in euro, in a few months time, also inhibits investment, and nationalistic rhetoric in Germany on that topic has added greatly to that uncertainty.
Greece’s future needs to be underpinned by a credible plan that focuses on private sector led growth, backed by a healthy European banking system,that invests in productive Greek businesses, rather than just in Greek government bonds, as it did in the past.
If that is to happen, it is not just Greece that needs to do a lot of homework, but the entire European Union. The EU needs a real banking union that allows banks to lend across borders to good projects wherever they are found in the euro zone. This needs common EU legislation on debt collection, collateral and the like.
The fact that Greek, Irish, Portuguese and Spanish taxpayers have borne large burdens to recapitalise their banks, or have undertaken new debts, as part of a project to sustain the global banking system, also needs to be recognised by the rest of the world.
This cannot unfortunately be done straight away. The problems that gave rise to the crisis must be understood, and fixed, first.
The Greek election result would not lead one to believe that Greeks understand the source of their problems. And the credence that many voters elsewhere give to rhetoric that suggests that being “against austerity” constitutes an implementable policy, in a world of free capital movement, suggests that many do not understand what went wrong or what can realistically be done about it.
But ultimately there must be an honest attempt to find a fair settlement of these legacy issues.
A Global Debt Conference, some time before 2022, when Greece has to make huge repayments, should be considered. It could be sponsored by the IMF, and might negotiate debt relief on the basis of the extent to which countries have, in the seven years between 2015 and 2022, implemented growth promoting reforms and achieved primary surpluses on their current budgets, taking account of the demography and the tax raising potential of each country.John Bruton Crisis EU Member States Growth
The long crisis in Greece
15 Feb 2015
Greek elections were not about the end of austerity and debt-write off. This was just an election narrative that captured the hearts of the Greek electorate and, surprisingly, dazzled large majority of the pundits, commentators and economists in Europe.
As good as it gets
As financial analysts are explaining, countries like Italy, Spain, and Portugal are spending larger share of their GDP to service their official debt than Greece. Much of the debt has already been written off or “hair cut”, a lot has been reprogrammed, postponed, the interest rates on the European loans are quite small. The troika is not requiring any substantial new austerity measures anyway. Much of what Syriza claims it wants has been done already.
In the words of Daniel Gros: “… in the end, the difference between a government that has never made good on its promises to pay and a government that promises not to pay might not be that large.”
If not much will change with respect to debt and austerity, what was this election really about then?
The problem of Greece is that it is not competitive, exports are sluggish and foreign investors are avoiding it. There is much to be done to make the country friendlier to entrepreneurs. This may include liberating the markets from the capture of tycoons and family networks that prevent fair competitive capitalism. It also includes a more efficient public sector.
The elections were hardly about this either.
Instead of a debate how to achieve that Greek economy would earn more, the elections were a mix of national and social populism. Like any populists, Syriza exploited natural and (in fact positive) instincts of compassion and patriotism.
National and social populism
The national populism was manufacturing an outside enemy in Europe and particularly Germany. The social one was spreading hatred towards capitalists and was promising hand-outs that the Greek citizens should be getting. Cheaper rents, cheaper oil, higher minimum wage, even more employment in the public sector …
National and/or social populism has proven a receipt for populists, anarchists and radicals to get to power. Generally few people fall for it. But under special circumstances, like war or major crisis, it works. As we have learned the hard way in the 20th century.
What is also needed is wishful thinking by democrats. A conviction that what populists say is what they really want. Like ending the humiliation of a country and all will be well; abolishing a treaty; some other small concession.
Economists (equipped with a hammer they too tend to see all problems as nails) are already proposing a compromise between what Syriza wants and what the EU and the creditors need to stick to.
Power. To the “people”
The real danger of Syriza and other populist left and right wing parties is their ambition for revival of ideology that has been proven wrong in the 20th century. Its essence is a disrespect for the human rights, the individual, her life, freedom and property.
The fight against domestic and foreign enemies in the noble name of social justice and patriotism was just a pretext, a side show, a slide show, to capture the hearts of the voters. Let’s not mistake this with the real agenda of the radical left – which is capturing of power and ruling the country, perhaps Europe, according to their ideological agenda. The agenda is to shape a “radically new post 2008 world”.
Center left and right
The radicals and populists may not be alone in this. Tony Judt once wrote that the Western European social democrats were always envious of their Easter European communist comrades. The latter could exercise the leftist agenda without the trouble of elections and without checks and balances of democratic society.
Today, traditional European left has a choice to make. Are left wing populists and radicals an ally or a competitor? Should they celebrate their success and join them in their struggle for a “better” world. Or see them as an enemy of democracy and liberty and therefore incompatible with modern Europe.
While the left may be inclined towards appeasement, the center right must confront populism with reason. That there are no free lunches. That hard work pays. That opportunities are there to exploit for everyone. That jobs are created by entrepreneurs and the role of the state is to make sure there is fair competition among them.
That solidarity is important too and it is not just an internal affair of each member state.
Revival of populist and radical utopian regressions, not the debate about more or less austerity, is the story behind the curtains in Greece and beyond. Debating austerity and hoping for an economic compromise is a discussion about a smokescreen. Not entirely irrelevant, but definitively not central.Žiga Turk Crisis EU Member States Growth
Greece: it is not about the austerity
02 Feb 2015
The response to Syriza’s election in Greece has been marked by much comment on the impending conflict between the new government and the EU, European Central Bank (ECB) and the International Monetary Fund (IMF). ‘Greece and global creditors dig in for fresh struggle over austerity’ headlined the Financial Times. In this narrative, Syriza in Greece, Podemos in Spain and Sinn Fein in Ireland are new forces in European politics, a left wing phalanx with a harder edge and a radical path to economic rejuvenation. This path to salvation will be achieved, in the short run at least, by increasing public expenditure (everything from pensions to salaries) and casting off the perceived shackles of the existing agreements with the EU, ECB and IMF.
However, as noted recently by my colleague Angelos Angelou, Syriza itself is characterised by deep rooted divisions over its long term economic goals. The recent moderation of Alexis Tsipras is matched by a substantial internal opposition who view the Euro (and the EU) as symbols of capitalist oppression and real impediments to the creation of a fairer Greek society. However, now confronting the realities of power, Syriza is faced with a fundamental choice – engage with the wider economic system as it is, or attempt a full blown restructuring of Greek society based on isolating Athens from her European partners.
These internal contradictions within Syriza also form part of the wider strategic shift to left-wing political movements in many member states, particularly in those states subject to bailout programmes since 2009. For these movements (which are more diffuse than traditional political groupings and generally bring together a diverse range of left wing interest groups) the campaign to end ‘austerity’ represents an opportunity to refashion classic socialist (and even communist) mantras for the twenty first century.
This strategic shift to the left does not just represent a campaign against the bailout agreements Rather, movements like Syriza are acting as lightning rods for public discontent at dire economic conditions, mistrust in centre-right political elites and a sharp decline in the public’s belief in the EU as a mechanism for achieving higher standards of living. The populist appeal of Syriza is based on the classical socialist approach of more public spending. Apart from a laudable commitment to tackle tax evasion the Thessaloniki Programme is very high on aspiration, but very short on hard economic realities or definite timescales.
For the centre-right in Europe the challenge now is to provide a more coherent vision of the social market economic model in the twenty first century: An updated model that places private enterprise at the centre of Europe’s return to growth. A model that gives all people – from start-ups to well established firms – equal opportunities to succeed and flourish. And of course, we need to keep working on the most effective way to provide countries in distress with a sustainable reform path based on our guiding principle of solidarity.Eoin Drea Crisis Elections Euroscepticism Eurozone Growth
The economic realities of Syriza in power
29 Jan 2015
Marcin Piatkowski is a Senior Economist at the World Bank in Warsaw specializing in central Europe. He speaks about the historically unprecedented success of Central Europe in the last 25 years, especially that of Poland, argues for the need to adopt a new growth model called “The Warsaw Consensus” and offers insights on introducing the Euro in Poland and the surrounding region.
What are the prospects for central European economies?
In general, the new EU member states in central Europe have performed extremely well during the last 20 years. They have grown much faster than their western European counterparts. Poland, Slovakia and Estonia have developed much faster than most emerging markets. Poland, the most successful economy in Europe over the last quarter of a century, has grown even faster than the so-called Asian Tigers such as Singapore or Korea.
As a result of this historically unprecedented growth—central Europe has never grown so fast in the past—the average income across the region increased from about forty per cent of the average western European level twenty years ago to around sixty per cent now. Countries like Poland, Slovakia and Estonia have shortened the distance to the West to an extent never experienced before.
Quality of life is even higher than suggested by the level of income, as reflected in the relatively high life expectancy, easy access to modern technology and low levels of crime. In terms of technology, the region has even leapfrogged the West. For instance, in Poland there are more touchless credit cards users than in Germany. In most of Central Europe, citizens have never had life so good. Poland, Estonia and Slovakia have entered their new golden ages.
However, while prospects for continued growth and catching up are generally positive (according to the IMF, Poland, for instance, is projected to grow more than twice as fast as Germany at least until 2019) past performance cannot guarantee future success.
What reforms and policies are required in central Europe?
Central Europe will have to continually readjust its growth model to continue to catch up. Given the inherent economic potential, most of central Europe should be growing at four per cent or more a year rather than the current two or three per cent. The speed of growth will decide whether central Europe will catch up with western Europe within a single generation or if it will take much longer. In the worst case scenario, the convergence process could stop altogether.
Central Europe needs to base its growth on a re-adjusted economic model which I call ‘The Warsaw Consensus’. It is based on ten policy pillars including inter alia domestic savings; high employment; labour markets open to immigration; strict supervision of the banking sector and a new focus on well-being rather than only GDP. Among other policies, central Europe has to continue to focus on employment, education, and innovation.
First, central Europe needs to substantially raise the employment rate: today only two out of three people work, while in the West it is three out of four. Raising the employment rate to the western European level would help accelerate growth; reduce inequality and improve the long term fiscal situation. Labour markets have to offer jobs to every one capable of working.
Second, the quality of education needs to increase further. While many countries in the region have achieved a remarkable improvement in primary and secondary education, the quality of tertiary education still leaves scope for improvement. There are no central European universities that belong to the global elite. This needs to change if the region wants to start to compete with the best global minds.
Finally, central Europe needs to enhance innovation. This is a significant challenge, as technological innovation has never been a strong part of the region’s DNA. There are only few examples of global innovations developed by central Europeans, however, most of them have not been commercialised, as in the case of Copernicus or Marie Curie-Sklodowska. Central Europe, now, has possibly the last chance to use another fifteen billion euro of EU funds available to support innovation until 2020 to adjust its economic DNA to move from imitation to innovation. From quantity to quality. From importing to exporting ideas.
How will the ageing population affect future economic development?
The challenge is that we may grow old before we grow rich. That being said, increasing life expectancy is the best outcome we could desire because the ultimate goal of economic growth is to allow us to live longer and healthier lives not the other way around. However, when talking about demographic changes we are missing one very important variable which tends to be pushed aside: immigration. The fertility rate across the whole region is low, below 1.5 children per woman. We would need a fertility rate of 2.1 for the generations to simply replicate themselves. We thus need to enhance our pro-family policies to make sure that the fertility rate increases.
However, due to cultural changes and a new family model, I am convinced that pro-family policies alone will not be sufficient to achieve the replacement fertility rate. Germany, which spends over ten times more on pro-family policies than Poland, has a similarly low fertility rate. More money will not solve the problem. It will thus be inevitable to fill the demographic gap by opening up to immigration. Central Europe should invite young people from all around the world to fill the increasing gaps in labor supply.
This could start from eastern Europe, whose citizens could integrate into our labor markets and societies with relative ease. The same passion with which we attract foreign direct investment, FDI, we should also deploy to attract foreign human investment: FHI. Highly-educated, young, entrepreneurial and energetic people should be our targets. An optimal way to attract young immigrants would be to open central European universities to foreign students.
Why Poland seems to be now more successful than other countries in the region?
It is likely due to a couple of factors. Poland, unlike all the other countries in the region, is a large economy, representing 40 per cent of the region’s GDP. It’s more than twice as big as the Czech Republic and three times as big as Hungary. Such a large economy has allowed Poland to base its growth largely on domestic rather than external demand, insulating the economy from external shocks.
Second, Poland started from a much lower income level. Back in 1989, it was one of the poorest countries in the region, behind Hungary or the then Czechoslovakia. It’s easier to grow when you start low, as in seen also with China.
Third, Poland witnessed a truly historical expansion of tertiary education. In 1989, Poland had 400,000 students. Today it has 1,600,000 students. Almost sixty per cent of young Poles are now taught at a university level. The quality of education is close to the European average. Poland has also done a lot to improve primary and secondary education.
When you look at the OECD Pisa study that looks at the quality of education of 15 year olds around the world, Poland is doing extremely well: Polish 15 year olds are better educated that most of western Europe and the US even though Poland spends less than half on a student than in the West. If I were to exaggerate a little bit, I would say that Poland is producing geniuses on the cheap.
Finally, from the very beginning Poland was lucky with the quality of its economic policy makers, who were competent, committed and honest. They also knew where they were going: towards Europe and joining the EU. They knew that Poland needed to become more open, more liberal, more entrepreneurial and more Western. Throughout the last 25 years there was an implicit consensus among all the parties both in power and in the opposition that Poland needed to become “European” again. And it has worked well.
Were you never challenged by Euroscepticism as seen in Hungary or the Czech Republic?
Poles are quite supportive of the EU. 80 percent of Poles support the EU. They have seen the benefits of EU accession and how the European convergence machine continues to work, taking in poor countries and making them rich. They have become the most European among all the Europeans. Had it not been for the institutions, values, norms and funds that Poland has received from the EU in the last twenty five years, it would have never achieved such remarkable success and never entered its new Golden Age. Poles are supportive of the EU also for geopolitical reasons.
Do you still believe in the big bang introduction of Euro as you wrote in an article for the Financial Times in 2008?
What I meant in this article was that at that time there was an opportunity to introduce the Euro to more countries on the condition of strengthened fiscal rules. I also argued that the exchange rate criterion for euro zone entry, i.e. the ERM II mechanism that requires countries to keep their currencies within a +/-15% band relative to the Euro, could be a challenge, especially for countries with floating exchange rates such as Poland. This is because entering ERM II would expose them to potentially destabilizing currency attacks.
The vast fluctuations of the Euro itself against the dollar show how hard it is to keep the exchange rate stable in the context of globalized currency markets driven by portfolio flows. The risks are particularly high for the Polish Zloty, which is the most liquid currency in Central Europe and a currency of choice for global speculators. Successful passage through ERM II would then require very careful planning and strong support of the ECB.
But do you still think that the best way is: “Euro as soon as possible”?
The introduction of the Euro cannot take place overnight but it is still the way to go. The euro would help to further enhance macroeconomic stability in the region, expand trade and increase private investment. It would thus help accelerate growth and allow Poland to catch up with the West faster, the current situation in the Eurozone notwithstanding. Central European countries that have already adopted the euro are on the whole doing well.
However, before entering the euro zone, countries like Poland first need to do their homework. This includes sustainably reducing budgets deficits to below 3 per cent, keeping public and private debts in check and reforming the economy so that its competitiveness is increasingly based on quality rather than quantity. Fewer potato chips, more micro-chips.
Interview by Vladka Vojtiskova. The interview presents personal views only.
Dr. Marcin Piatkowski was a speaker during the fifth annual Economic Ideas Forum that took place in Bratislava on 16-17 october 2014. He is a Senior Economist at the World Bank in Warsaw, former Chief Economist of PKO BP, the largest bank in Poland, economist in the European Department and Advisor to Executive Director at the International Monetary Fund in Washington D.C. He is an Assistant Professor of Economics at Kozminski University in Warsaw. He also served as Advisor to Poland’s Deputy Premier and Minister of Finance. He has recently published papers on “Poland’s New Golden Age: Shifting from Europe’s Periphery to Its Centre” and on “The Warsaw Consensus: The New European Growth Model” He tweets using @mmpiatkowski and can be reached at email@example.comEconomy EU Member States Eurozone Growth Macroeconomics
Central Europe: move from imitating the West to innovating!
19 Nov 2014
The EU’s uneven recovery from the economic turbulence of recent years has highlighted a fundamental shift in Europe’s growth dynamics. A new briefing by the Wilfried Martens Centre for European Studies argues that as much of ‘old Europe’ struggles to regain economic growth, several of the ‘new Europe’ member states of Central and Eastern Europe (such as Romania) seem poised to drive economic activity forward in the coming decade. This shift, allied to the significantly improved medium term growth prospects of ‘programme’ countries (Ireland, Greece, Cyprus, Spain and Portugal), illustrates the positioning of more peripheral EU member states as reform leaders who may act as the catalyst for longer term growth in the EU.
IN FOCUS is a new series of commentaries, in which the Martens Centre looks closely at current policy topics, dissects the available evidence and challenges prevailing opinions.Eastern Europe Economy EU Member States Growth
The EU’s Reform Cycle: Out with the old and in with the new? Romania and EU Growth dynamics
10 Jul 2014
The period since the outbreak of the financial, economic and social crises in Europe has witnessed a renewed focus on the need to develop a more sustainable and qualitative growth model. A model where the traditional focus on economic growth (i.e. GDP growth) is complemented by an adherence to a wider range of qualitative indicators. Indicators which more broadly characterise the well-being of society as a whole. This paper defines a model for Sustainable and Qualitative Growth (SQG) in the EU and questions if existing EU economic and social governance arrangements are consistent with this wider approach to building a sustainable growth model. This paper identifies a number of key recommendations. First, a more encompassing, balanced and multi-dimensional EU strategy for growth should be adopted. This refined strategy should take into account the broader indicators underpinning the SQG model and should be addressed in key EU documents such as the Annual Growth Survey. Second, a symmetric and ‘time consistent’ macroeconomic strategy, allowing for investments in SQG related domains, should be pursued. These growth-enhancing investments should primarily target relevant policy areas such as education and training, technological innovation and lifelong learning strategies. Third, a common automatic stabiliser in the EU should be set up in order to provide a minimum level of EU investment across all member states.Crisis Economy Growth Sustainability
A Model for Implementing Sustainable and Qualitative Growth in the EU
02 Jun 2014
The referendum against “mass immigration” in Switzerland has reminded us of the importance of the principle of freedom of movement at the heart of the Single Market. The principle is based on four pillars or freedoms – goods, people, capital and services. However, there is another pillar which has been overlooked but is intrinsic to the principle, one that we often use to justify the other four freedoms – the freedom of knowledge.
This fifth pillar is not a new concept. Janez Potočnik, the former European Commissioner for Science and Research, introduced the idea. Potočnik identified that lack of cooperation between member states on R&D rendered the European Research Area less dynamic. He argued that there should be greater synergy across national borders, reducing costs, promoting economic growth and job creation.
To me it always seemed that the idea went a bit beyond what Potočnik had in mind. Knowledge is not limited to R&D, technology and science. It includes culture and the arts. The fifth freedom offers us a way to think about knowledge which is free from many of its traditional limitations.
We cannot speak of a fifth freedom without taking into account the digital economy, which is of course key to innovation – making it faster and borderless. Telecommunications, high speed internet and services are integral to the economy. However, this sector is not getting the investment it needs, gravely increasing our competitiveness gap with other markets such as the US and Asia. A recent study [http://ces.tc/1nJnm5W ] estimates that by 2020, if the current year-on-year drop in investment in the telecoms market continues, Europe will not meet its EU Digital Agenda targets for broadband coverage and penetration. We will find ourselves having missed a huge opportunity for the broader EU economy.
A new approach to the digital economy and smarter EU funding will make Europe more competitive and unlock further investment.
Too much funding might be distributed to duplicate research or funding may be mismatched [http://ces.tc/1gyTKrH ]– i.e. it might go to a region that lacks know-how in one area, instead of going to a stronger region unaware of available funds. Creating meaningful consortiums by bridging universities, research institutions and businesses will help fill these unnecessary overlaps and gaps. You can do this by investing in facilities that enhance the transfer of knowledge between institutions. The exchange of cultural experiences and skills can unlock further funding, investment and ideas.
Member states, research bodies, universities and EU institutions can facilitate knowledge mobility:
• Member states could reform laws by making them innovation friendly. They could offer tax incentives to innovative enterprises similar to tax breaks for low emission vehicles [http://ces.tc/1nJnHWl ]. Member states should also agree to harmonise telecoms regulation at the EU level, unlocking wasted money for much needed investment in technology and increasing innovative capacity.
• As part of the new EU’s research programme Horizon 2020, designed to make Europe a more competitive economy, the EU could simplify bureaucracy for funding applicants and also help identify partners – the EUapp report [http://ces.tc/1m4sx1j ] is a good example of EU support aimed at finding opportunities in the digital economy.
• Universities and research institutions should raise the awareness of European organisations in these areas and work in collaboration with other universities on specific projects and look to partner with private enterprises. This in turn, will help them gain international recognition. Consortiums may be more appealing for investors, like multinationals looking for breakthrough ideas. Microsoft [http://ces.tc/1jN2OfC ] alone spends $10 billion per year just on R&D.
David Bohm famously conceived of knowledge as the stream of thought flowing among, through and between us. The freedom of knowledge is an ideal high enough and noble enough for all Europeans.Bruno Maçães Economy European Union Growth
The fifth freedom: transforming the single market
18 Feb 2014
On 16 December, a delegation from the Centre for European Studies (CES) met with officials from the Organisation for Economic Cooperation and Development (OECD) in Paris. In a meeting with Yves Leterme, Deputy Secretary General of the OECD, a range of areas including economic, social and industrial policies were discussed as priority fields for both organisations.
Tomi Huhtanen, CES Director elaborated on the activities and priority topics of the CES. He noted that both the CES and the OECD share the belief that implementing reforms will lead to growth and sustainability in the economy. During the day, further meetings took place with key OECD experts including Monika Queisser, Head of Social Policy Division and Eckhard Wurzel, Senior Economist where the topic of the European welfare state and the issue of competitiveness were discussed.
The role of education in economic growth was discussed with Simon Field, Senior Analyst, Directorate for Education and Skills while Andrew Wyckoff, Director of Science, Technology and Industry, alongside Alistair Nolan, Senior Economist provided their insight on innovation and industry as new sources of growth. Finally, the topic of entrepreneurship and small and medium-sized enterprises was discussed with Sergio Arzeni, Director of the Centre for Entrepreneurship at the OECD.Economy Education Growth Jobs
CES meets OECD experts
17 Dec 2013
The latest session of the Working Group Economic and Social Policies of the European People’s Party that took part on 4 December 2013 discussed the issues of reforms and economic growth. The book by the CES and its member foundations, “From Reform to Growth: Managing the Economic Crisis in Europe” served as a background to the discussion and provided arguments for the debate.
The book analyses government responses to the current economic crisis, covering nineteen European countries, and based on this, offers recommendations to policymakers at national, regional and European level. The book argues that lasting economic growth should be restarted by a combination of fiscal consolidation measures and structural reforms, which include creating flexible labour markets, functioning pension systems and efficient public institutions.
The discussion at the working group focused on the varying experiences that different European countries have had with managing their economies during the crisis. Countries from all corners of Europe have made significant attempts to reform and thus increase the competitiveness of their economies; others have a long journey ahead of them. There is a lot of scope to learn from one another and the participants mentioned inspiring examples. At the same time, it was stressed that economic formulas cannot replace a policy focus on people’s personal development and welfare.
The European People’s Party operates several working groups in which experts and representatives of member parties take part. The agenda of the Working Group Economic and Social Policies is to debate economic policy challenges and strategies.
The book has been officially launched earlier this year during the fourth annual Economic Ideas Forum, which was held in Helsinki during 6-7 June 2013 and gathered high level European and national policy-makers together with economy experts. Several other launching events took place in other EU capitals, including Brussels, Berlin (organised by the Konrad Adenauer Foundation) and Tallinn (in cooperation with the Pro Patria Institute).Centre-Right Economy EU Member States Growth Macroeconomics
CES study on economic crisis discussed at Working Group of the European People’s Party
05 Dec 2013
Vít Novotný Crisis Economy Growth Sustainability
From Reform to Growth – Managing the Economic Crisis in Europe
05 Nov 2013
GLOBALISATION REFLECTS OUR CHOICES
Ireland’s new Minister for European Affairs, Paschal Donohoe TD, gave an interesting speech last week. He made the point that globalisation, of which many people complain, is not something “done to us, but is a consequence of the human desire to communicate, share, and exchange”. He is right.
He could have added that humans also want lots of variety and choice in their lives, sometimes to an excessive degree, and that this drives globalisation forward as people go to the ends of the earth to find elusive “highs” in their lives. He went on to say that the European Union gives us an opportunity to “positively mediate the consequences of globalisation”. He is right here too. A small country on its own, like Ireland, could have little impact on global trends, but the EU, as a block, can make a difference. Globalisation has been facilitated by the internet, Skype, containerisation, cheap air fares and plentiful energy sources.
All these took investment to generate and would not have happened if people did not want them or were unwilling to pay for them. These technologies cannot be “uninvented” now. So globalisation cannot be reversed. It is here to stay.
HOW SHOULD WE COPE WITH THE CONSEQUENCES OF GLOBALISATION?
But all this variety, all this communication and all this exchange does not necessarily make us happier.
In fact, the more choices we have to make, the more discontented we can often become. This is especially so if we feel we have to make these choices to keep up with neighbours or others with whom we feel we must compare ourselves. Choices are hard to make. They require an effort. They involve saying No, as well as Yes. And the more choices you have, the more are the things you have to say No to. The more options you have, the more regrets you may have about the choice you could not make. The more choices we have the more we expect of life and of ourselves.
“The Paradox of Choice”, by Barry Schwartz, had the subtitle “How the culture of Abundance robs us of satisfaction”. People are shopping more now, but enjoying it less. Increased choice may actually contribute to the recent epidemic of clinical depression. Depression has tripled in the last two generations, despite all the treatments now available, that were not there 60 years ago.
The culture of “more choice” undermines institutions like churches. Because choice is the priority, people do not want to regard religious teachings as commandments, about which they have no choice, but as suggestions about which they themselves are the ultimate arbiters.
The over estimation of the value of choice may also have something to do with the increased divorce rate, because, as Schwartz puts it, “establishing and maintaining meaningful social relations requires a willingness to be bound and constrained by them.” But constraints are exactly what the ideology of choice rejects!
EUROPE NEEDS A RENEWED VALUE SYSTEM, IF IT IS TO MEDIATE GLOBALISATION
“Studies have estimated that losses have twice the psychological impact as equivalent gains” says Schwartz. In other words, people hate losing 100 euro, a lot more than they like winning 100 euro. This may explain why people in modern well off societies are so anxious, and why, in the face of recent economic losses, many are regressing to old dead end ideas like nationalism, class warfare, and xenophobia.
Happiness is at last being measured by economists, as well as the gross domestic product. It seems that once a society’s per capita wealth crosses a threshold from poverty to adequate subsistence, further increases in national wealth have little effect on happiness. You may find as many happy people in Poland as in Japan, even though the average Japanese is much richer than the average Pole. This should make us stop and think.
Economic growth is a good thing, but it has physical limits, as we are discovering with climate change and pollution. Economic growth also has psychological limits, in the sense that some forms of growth increase anxiety by offering people a bewildering array of choices that they do not feel competent to make. Markets only work well if people are informed enough, and have the time and mental energy, to make wise choices.
Laws and government subsidies will never be enough. Societies need a strong value system if they are to be happy. These values must put human respect ahead of material things and human relations ahead of maximising choice. The science of economics is only beginning to recognise this.
If the European Union is to positively mediate the consequences of globalisation, it must ask itself whether the values of more choice and more material abundance, imported from economics, are sufficient to build a good society. I believe they are not, but I do not have the sense that a discussion of alternative and better European values is yet taking place.John Bruton Economy Globalisation Growth
Globalisation is not something that is done to us
04 Nov 2013
Banking Economy Energy Growth Transatlantic
Economic Ideas Forum Helsinki 2013 – Conference Report
02 Sep 2013
Jürgen Matthes, co-author of a new CES study on public finances and growth talks about how to counter the dangers of self-defeating austerity and the four objectives that have to be taken into consideration when implementing smart fiscal consolidation measures.Jürgen Matthes Crisis Growth Macroeconomics Social Policy Sustainability
Smart Fiscal Consolidation: Achieving Sustainable Public Finances and Growth
10 Jul 2013
Due to high government debt levels and the dangers of self-defeating austerity, smart fiscal consolidation measures are needed that foster economic growth. A thorough review of the relevant literature provides many useful insights. To regain credibility, a clearly communicated broad reform program (including structural reforms) is required. Targeting mainly public expenditures, rather than revenues, raises the chances of expansionary effects. The timing of consolidation should focus on adjustment in structural terms to leave room for automatic stabilisers. The main part of the study evaluates the impact of individual consolidation and fiscal reform measures on consolidation success, on economic growth (in the long and short term), and on social fairness.Economy Growth Macroeconomics Sustainability
Smart Fiscal Consolidation: A Strategy for Achieving Sustainable Public Finances and Growth
09 Jul 2013
The topic of this year’s Economic Ideas Forum (EIF), organized by the CES in Helsinki, was “From Reform to Growth: a Roadmap for Europe”. We chose this title because we are convinced that it is the combination of budgetary AND structural reform that will create the conditions in which lasting growth is possible. And only lasting growth will lead to more and better jobs for Europeans. It is difficult to image a better place than Finland to organize a conference with this in mind. The country successfully reformed itself after an economic crisis 20 years ago and today it is a prime example of good economic governance.
“Both more Europe and more national responsibility”, these are the words spoken by Prime Minister Katainen when addressing the European Parliament’s plenary session in April, and I could not agree more. To the populist voices claiming that Europe cannot find common solutions: I say that’s simply not true. To the populist voices saying that European institutions are a threat to their countries I say, quoting Prime Minister Katainen, that strong rules and strong European institutions are the protectors of the member states, especially the smaller ones.
The EIF was a great opportunity to emphasize the idea of cooperation between different Member States. At the European People’s Party (EPP), we have always felt that the EU is much more than a partnership. The EU is a community, and it brings together countries of different size, economic power and wealth, and different cultures. However, the aim is to find, and strengthen, the things we have in common and to value the richness and opportunities of our diversity.
At the EPP we believe in the power of individuals and the importance of union and solidarity. We believe that a European community exists an adds value to people’s lives. It is an antidote to both egoism and populism. This is why, when citizens and states show initiative to cope with difficult times, this European community should show its solidarity. The strong have to help those who are weakened and the weakened have to make the effort to get back to economic growth. This means reaching a careful balance. We must give our members the freedom to follow their own paths to success, while maintaining a common goal and vision.
We do not believe in the artificial growth defended by other parties. We profoundly disagree with their proposals to create unsustainable, short-term growth by increasing public spending and refusing to present credible measures for fiscal consolidation. This is an irresponsible and populist approach, which will lead us deeper into the crisis.
I should make a small mention of my own country: Spain. It has been a tough few years: reforms were unpopular and often misunderstood, but we have been patient. We held the course and the economic fundamentals are starting to paint a better picture. Unemployment has decreased for three months in a row, inflation has been kept under control and the competitiveness of our exporting companies has increased non-stop. I believe that we can feel prudently encouraged, and all my colleagues in the EPP, Prime Ministers, Finance Ministers, have shown their admiration and encouragement for our reforms and efforts.
Maintaining social cohesion is a priority, but we must achieve this in a responsible, sustainable way, with emphasis on the “sustainable” part because this is where we differ most from the Socialists. We know that growth is not something that a government, or the EU, can decree. Growth is created by people: by entrepreneurs and consumers who act within a stable and predictable framework. In order to create this framework, market confidence in politics has to be restored, and that means fiscal consolidation and economic reform. In the long run, it means a stronger economic and political Union.
There is no silver bullet for resolving the current crisis. Its causes are complex and the solutions cannot be simple, which is why conferences like the EIF are necessary.Antonio López-Istúriz White Economy European People's Party Eurozone Growth
Antonio López-Istúriz White
The Economic Ideas Forum: a roadmap to sustainable growth
26 Jun 2013
The global economic crisis that began in 2007 has posed huge challenges for European citizens and governments. The crisis has shown that the ﬁnancial sector has not been adequately regulated and supervised, that governments and individuals have overspent, and that European economies are suffering from structural problems. This book, a collaboration between the Centre for European Studies and its member foundations, assesses government responses to the crisis at the national, EU and regional levels, and also offers policy recommendations. Governments should work with one another and with EU institutions to improve bank supervision and regulatory mechanisms. They should undertake ﬁscal consolidation measures, bearing in mind that government deﬁcits and debt incur costs that burden future generations. Finally, they should undertake structural reforms such as creating ﬂexible labour markets, increasing the retirement age and shaping efﬁcient public institutions. Implementing such measures would bring about lasting economic growth, contribute to job creation and set Europe on the path to prosperity.
You can buy the book, including e-book versions, at:Centre-Right Crisis Economy EU Member States Growth
ibookstore.com (http://ces.tc/1eFKvDP) and
From Reform to Growth: Managing the Economic Crisis in Europe
31 May 2013
Today, no one disputes that credit is vital for small and medium enterprises. Despite the momentum that big businesses give to our economies, SMEs are still the basis of the Spanish productive sector and the ones employing the majority of citizens in Spain and in Europe.
With the crisis, the challenges facing SMEs have become more pronounced. Not only because of the drop in sales as it is the case for other companies, but because of major difficulties in accessing credit. A few years ago, almost any solvent SMEs in Europe could take out a loan. However, the situation has changed and today, the financial market is “fragmented”. What do we actually mean with this? Simply that the criteria for accessing credit varies greatly across Europe. For example, an SME in Spain must satisfy vastly different criteria than an SME in Germany in order to take out a loan.. The result of this is that banks are failing to grant loans to companies in Spain, while similar companies in Germany are being provided with the credit they need. Moreover, even in cases where they can access loans, Spanish companies end up paying a hefty premium, estimated by Deutsche Bank to be in the region of three and four percent.
This fact is drowning many small and medium Spanish enterprises and therefore affecting the recovery of the country and of Europe as a whole. If SMEs do not have access to credit, their ability to run a business is severely impeded and this in turn has serious consequences on the employment situation and economic growth. We need to consider the different possibilities available to solve this problem. The ECB is expected to cut the interest rate by 0.5% in a few months. However, we have observed how a decrease in interest rates will not solve the fragmentation in the financial markets. We should therefore consider measures such as the ECB changing its collateral policy and authorising banks to use SMEs debt to access credit from the ECB. There is also possibility that the ECB could buy SMEs debt directly from banks in the periphery countries.
These measures, as opposed to low interest rates, would have a direct impact on SMEs, as they could access credit and thus bring us back to the path of growth. The two questions that will decide the future are: will Germany accept such measures? Will the ECB assume a role that it has until now refused? I have no doubt that something is moving in the ECB.Pablo Zalba Banking Business Crisis Growth Jobs
SMEs: A Solution from Europe
30 Apr 2013
News emerged last week which contributed to a climate of confusion, fuelled by conflicting messages fantasising about unlikely scenarios.
After a series of reports suggesting that the Commission could carry out a Macroeconomic Imbalance Procedure (MIP) with Spain, some sections of the media interpreted this as a reprimand of the Government of Spain. Last week the President of the Eurogroup, Jeroen Dijsselbloem, re-affirmed his confidence in Spain, stating that Spain can be the engine of growth in the Eurozone.
These events give the feeling that some sections of the Spanish media are liable to deliberately magnify the negative when reporting economic news.
Despite of the importance that carrying out a MIP could have, one must bear in mind certain facts. Firstly, we must remember that any decision to carry out a MIP will be made on the basis of previous procedures, including an analysis of relevant data in 2011 under the government of President José Luis Rodríguez Zapatero. Subsequently, there is a final check to identify the countries with excessive macroeconomic imbalance. In this case, Spain and Slovenia.
This process involves an information gathering process and does not necessarily involve any mandatory corrective action. We must bear in mind that in order for this procedure to have consequences, like the imposition of conditions or sanctions, we would have to move to a new step of the process in which the Council, on the basis of a recommendation from the European Commission, would advise the concerned Member States to take corrective action.
Therefore, it is obvious that the controversy does not respond to reality. Moreover, I have no doubt that corrective actions will not be recommended. The Vice President of the Commission, Olli Rehn, has already hinted the fact that the Commission would give Spain two additional years to meet its deficit targets.
Data shows that Spain, despite the challenges that still have to be faced and of which its current Government is fully aware, is on the right track.
But let us not forget that is also time for Europe to act. Even if Spain is on the right track, every effort will be useless if Europe does not create a banking, economic, fiscal and ultimately political union.Pablo Zalba Crisis Eurozone Growth
Much ado about nothing
17 Apr 2013
The new dimension created by the development of Information and Communications Technology (ICT) provides a clear business opportunity for small and medium sized enterprises in the European Union, which should be taken as a formula to create jobs and boost business competitiveness.
At present, the possibilities offered by newly created tools such as cloud computing enable European SMEs to have an opportunity to grow that needs to be promoted by the EU institutions.
Cloud computing is a new technology tool that allows businesses to access a catalogue of services. It also allows businesses to respond to their needs in a flexible manner and enable them to adapt to the demands of the moment, paying only for what they need to consume at any given point. Cloud computing also increases the number of network-based services, enabling providers to operate in a faster and more efficient manner. Finally, these benefits come with an optimisation of costs and a guarantee that the service will remain secure.
The European Union must make a firm commitment to further the use of this valuable tool., As my colleague MEP and President of the European Internet Foundation, Pilar del Castillo points out, cloud computing offers a unique opportunity to spur economic growth and boost employment. Studies have concluded that fully implementing this tool could generate an estimated 3.8 million new jobs in the EU in the framework of the Horizon 2020 Programme.
Besides promoting job creation and innovation, and contributing to increased productivity and competitiveness, cloud computing has tremendous potential in terms of cost savings of ICT. It will also act to boost the development of the digital single market.
Data protection regulations must be adapted in order to accommodate this new technology and, at the same time secure and strengthen consumer confidence.
On the other hand, the fragmentation of the Digital Single Market should no longer be one of the outstanding issues, in order for cloud computing to realise its full potential.
In order to carry out these actions, we need the support of the EU to continue to promote access to new technological innovations including the deployment of High Speed broadband in Europe or the achievement of other initiatives already underway, such as the Galileo program of the European Commission for the development of the European satellite navigation.Pablo Zalba Growth Innovation Internet
The cloud: a business opportunity for EU SMEs
09 Apr 2013
President Obama’s state of the union address contained a big success for transatlantic relations: “And tonight, I am announcing that we will launch talks on a comprehensive Transatlantic Trade and Investment Partnership with the European Union – because trade that is free and fair across the Atlantic supports millions of good-paying American jobs.”
A comprehensive Partnership agreement, covering investments, regulatory convergence and other non-tariff barriers would be a game changer in world trade relations. And this, for different reasons:
– It would enable the European Union and the United States to lead instead of follow when it comes to standard setting. This might seem as a technical argument but it is not. It would enable the EU and the US to set world standards for electrical cars, mobile devices, etc. giving our industries a competitive advantage.
– Indirectly, this Partnership agreement will increase the appetite for other economies to open up as well. When barriers to invest between the EU and the US are lowered, it will increase the interest of emerging economies to engage in similar negotiations. As they will want to avoid that EU or US investments are diverted from their economies to the transatlantic economic area. As such, a EU-US agreement will revive multilateral free trade negotiations.
Overall, a EU-US Partnership will make both economies more competitive and stronger. Such an agreement will not be a zero-sum game but a gain for both parties. However, some EU and US industries will face more competition and might lose or, to the contrary, become more globally competitive. Moreover, it might make the US a bit more European and the Europeans more American, an evolution that should benefit both societies.Stefaan De Corte Economy Growth Jobs Trade Transatlantic
Stefaan De Corte
Transatlantic Free Trade – An Agenda for Jobs, Growth & Global Trade Leadership
14 Feb 2013
A recent study conducted by Deutsche Bank concluded: “Based on this approach the authors could identify improvements in competitiveness in the GIPS countries (Greece, Ireland, Portugal and Spain), but not in Italy and France. This suggests that the reduction in Italy’s current account deficit has been cyclical. The persistence of the French deficit is consistent with the lack of competitiveness and more robust domestic demand growth.”
In short, while some European countries such as Spain are improving the competitiveness of their economies, others are making no such progress. Should this trend continue, economic imbalances in Europe could emerge. In order to emerge from the crisis we need to improve productivity. The only alternative would be to lower wages. All European countries should strive towards creating innovative economies that can sustain relatively high wages and good working conditions. Europe cannot compete on the basis of labour costs. Rather, Europe must compete in terms of innovation and talent.
The second issue on which we should reflect is the lack of competitiveness of the French and Italian economies, as found by Deutsche Bank. Economic experts are concerned about both economies. France has become less and less competitive because of a failure to introduce necessary structural reforms. In Italy, the forthcoming elections make it unclear whether or not an agenda of structural reforms, of the sort which benefited countries such as Spain, will actually be introduced.
Hopefully in the coming months, Italy and France will resume a reform agenda and begin to experience economic growth once again. Not only for the good of their respective citizens, but for the good of all Europeans.
Restoring Europe’s competitiveness
14 Feb 2013
CES is proud to host the fourth Economic Ideas Forum, which will be held in Helsinki during the 6th and 7th of June 2013 under the Patronage of Prime Minister Jyrki Katainen. The annual conference brings together high level economic experts, Ministers of Economy, EU Commissioners, EU Prime Minister, as well as business leaders from around the world. The Forums provide an opportunity to consider innovative ideas and propose solutions to the economic challenges facing the EU economy.
This year’s Forum will once again contemplate the pressing issues on the economic agenda: the role and continued relevance of the EU in the global economy, new sources of growth, how to tackle unemployment, banking and financial regulation, green economy and sustainability. Every year, over 250 participants attend this high level, interactive conference. Confirmed speakers include Prime Minister of Latvia Valdis Dombrovskis; EU Commissioner Olli Rehn; Alexander Stubb, Minister for European Affairs and Foreign Trade of Finland; Irish Minister of European Affairs Lucinda Creighton; Erkki Liikanen, Governor of the Bank of Finland; Portuguese Minister of Finance Vitor Gaspar; and Jari Koskinen, Minister of Agriculture of Finland.
Previous Forums have been successfully held in Madrid (2010), London (2011) and Dublin (2012) and have received wide international media coverage. Please keep checking our website for more information regarding the programme, speakers and online registration.Banking Economy Energy Eurozone Growth
CES proud to host fourth Economic Ideas Forum in Helsinki under the patronage of PM Katainen
07 Feb 2013
This publication summarises the proceedings of a conference organised during April 2012 in Lisbon by the think tank Platform for Sustainable Growth (Plataforma para o Crescimento Sustentável) on the topic “How can we foster green growth?” Speakers included António Costa e Silva (CEO of Partex), Joy Kim (Advisor at United Nations Environmental Programme), Peter Vis (Chief of Cabinet of the EU Commissioner on Climate Action) and Carlos Pimenta (Coordinator of Sustainability at PCS). The aim of the event and the follow-up publication was to identify the role green economy can play to achieve sustainable growth in Europe in general and Portugal in particular.Economy EU Member States Growth Renewable Energy Sustainability
How Can We Foster Green Growth?
05 Nov 2012
This publication summarises the proceedings of a conference organised during February 2012 in Lisbon by the think tank Platform for Sustainable Growth (Plataforma para o Crescimento Sustentável) on the topic “How can we simultaneously foster growth and consolidate our public finance?” Speakers included Lucinda Creighton (Minister on European Affairs, Ireland), Andrew Haldenby (Director of the think-tank REFORM, UK), Philippe Aghion (Harvard University, US), Vitor Bento (President of SIBS) and Jorge Vasconcelos (PCS). The aim of the event and the follow-up publication was to identify policies and measures to foster sustainable growth in Portugal going beyond the Memorandum of Understanding signed between Portugal and the International Monetary Fund, European Commission and the European Central Bank. The main conclusion is that in addition to fiscal consolidation, Portugal also needs to focus on structural reforms and selective and reproductive investments on knowledge economy, green economy and industrial policy; this his will foster an innovation-led economy.EU Member States Growth Innovation Sustainability
Growth and Austerity: How to Foster Growth in Times of Austerity?
01 Nov 2012
The third annual Economic Ideas Forum, EIF12 took place in Dublin on the 19th and 20th of April and brought together experts and policymakers from across Europe and beyond. Participants included EU officials, parliamentarians and senior Irish politicians, as well as high-level representatives of major corporations. As Europe continues to struggle, fresh ideas are urgently needed for revitalising the economy, generating growth and creating jobs. This unique gathering of speakers and participants provided an ideal opportunity to discuss current economic issues and challenges while offering innovative policy ideas and solutions.Over the course of five panel discussions, as well as keynote addresses by EU officials, ministers and heads of government, significant and timely topics were tackled including greater integration in the European Single Market, greater fiscal responsibility in all Member States, closer economic coordination with Europe’s partners, especially the United States and creating a stronger European identity and sense of solidarity among citizens.Business Crisis Economy Eurozone Growth
Economic Ideas Forum Dublin 2012 – Conference Report
02 Jul 2012
The second annual Economic Ideas Forum, EIF11 took place in London on the 25th and 26th of May and brought together high-level government officials, business leaders and other influential stakeholders from across Europe and the United States. Participants included EU officials, parliamentarians and senior British politicians, as well as high-level representatives of major corporations. This unique gathering of speakers and participants provided an ideal opportunity to discuss current economic issues and challenges while offering innovative policy ideas and solutions. Over 200 participants took part in EIF11, which counted on the support of our partners the Stockholm Network and Business for New Europe.Business Crisis Economy Growth Macroeconomics
Economic Ideas Forum London 2011 – Conference Report
25 Jul 2011
The financial crisis and global warming have led to a crisis of confidence in our traditional ways of measuring wealth because they do not take speculative risk and environmental costs into consideration. A number of alternative indexes have been proposed that would measure people’s well-being and the environmental sustainability of the planet.
Even though the gross domestic product (GDP) measure has its problems, a look at the alternatives reveals that they are constructed with a specific political agenda in mind and are easily manipulated by governments.
In fact, a strong argument for sticking with GDP is that it is narrow in scope and value free. It tells us what we can do, but not what we should do, and does not even try to define well-being. It fits a liberal, pluralistic society where people have different interests, preferences and attitudes to well-being. Our present environmental and financial problems can and should be solved within the intellectual framework of economic growth.Crisis Economy Growth
GDP and its Enemies: the Questionable Search for a Happiness Index
01 Sep 2010
The first annual Economic Ideas Forum brought together high-level economic experts, Ministers of Economy, EU Commissioners, former Prime Ministers and Ministers of EU Member States and business representatives from around the world in an effort to set in motion a synergetic chain by involving EU leaders with the business community and inspiring them with strategic insights. The Forum took place in Madrid, 15 April 2010 during the ECOFIN Meeting of Ministers of Economy and Finance and was a perfect opportunity to present new ideas and offer solutions for overcoming the current global financial and economic crisis. The Forum tackled the hottest topics in the economic agenda: international cooperation; coordination of strategies; economic dynamism; the promotion of a value-driven economy; building a competitive and sustainable economy that promotes green investments, innovation, the promotion of small and medium-sized enterprises, and the activation of sustainable recovery actions. Over 250 participants joined in the Forum, which counted on the support of the two of the Centre’s member foundations, FAES (Fundación para el análisis y los estudios sociales) from Spain and KAS (Konrad-Adenauer-Stiftung) from Germany.Business Crisis Economy Globalisation Growth
Economic Ideas Forum Madrid 2010 – Conference Report
01 Jun 2010
As a consequence of the most severe economic crisis in post-war European history, public debt is bound to reach record highs in many EU Member States. Obviously, such scenarios pose an imminent but also ongoing challenge to European policy-makers both at national and at EU levels. Thus paper assesses the extent, consequences and possible solutions to the current public debt crisis in Europe.Economy Eurozone Growth
Avoiding the Debt Trap: Public Finances in Crisis and Recovery
01 Feb 2009