RE-BOOTING THE EU’S ECONOMYSolutions and constraints

Iain BEGGEuropean Institute

London School of Economics and Political Science

PHASES OF GRIEF/MANAGING CRISES • Fire-fighting• Blame shifting• Hyper-activity to reform

governance/institutions• Pause to rethink models• Reaching agreement• …then implementing it

• Denial mixed with shock• Anger• Bargaining, largely in vain• Depression as reality dawns• Testing and acceptance of

(often difficult) solutions

CLASHES OF ECONOMIC PHILOSOPHIES• On running economic and monetary union– Rules: the ordo-liberal “German” approach– Gouvernement économique, á la française

• Promoting or controlling markets• Though not necessarily mutually exclusive

– 1980s saw the ascendancy of neo-liberalism– Now, could it be a neo-social democratic drift?

• For example: the social investment turn & social responses to populists

• Needs new engagement & definition of the state

MORE OR LESS EUROPE?• Probably the wrong question– Instead, an optimum Europe should be the focus– Burden-sharing essential for sustainability

• Investment strategy required– But Juncker plan only a partial, somewhat limited answer

• Debt mutualisation, starting with EDIS• At least steps towards Eurozone fiscal stance• In time, some stabilisation capacity

• Needs to be distinguished from distributive transfer union

PERSPECTIVES ON WHERE WE ARE NOW• The crisis phase is probably over– But new trajectories of divergence have to be faced…and feared– Resilience, growth and jobs remain problematic

• Risks from labour (especially skilled) and capital mobility

• Potentially significant proposals on the table (4/5 Presidents)• But are being taken forward far too hesitantly for political reasons• Space for change within the current treaty becoming exhausted

• We remain far from an optimal political economy– At the root of the problem of achieving fiscal/political union

“Difficulty is the excuse history never accepts”

Ed Murrow

Have a look at: http://ukandeu.ac.uk