Europe 2020 and Beyond 

EU Strategy

Seeking the Road to Deeper Integration

With European parliament elections launching a new legislative cycle, and many European countries trying to find their feet after the economic crisis and recession, politicians, academics and thinkers reflect on which Union Europe wants, how it should function and what could be done to invigorate investment and growth.

Drastic Changes Cause Tensions

“A balance needs to be struck between austerity and growth, between an open economy capable of stimulating growth and investment and one which is able to provide the necessary social safety net to its citizens,” Deputy Prime Minister Louis Grech said. He said he was convinced that “Europe should concentrate on the fundamental issues of growth, investment, economic stability, employment, and social inequalities.” He stressed: “In this particularly problematic and fragile time in Europe’s history, it is unrealistic and counterproductive to increase uncertainty and instability by proposing drastic changes that could bring about new tensions.”

The ultimate objective must be growth through investment, the Deputy Prime Minister said.  “There is no doubt that the Single Market could be the main catalyst to achieve a competitive social economy. For it to be successful, the Single Market has to be accepted by citizens as championing their interests and protecting their rights, and by SMEs as giving them the right incentives.” According to Mr Grech, the EU also needed to catch up in certain vital sectors, such as Research and Innovation, the Green Economy and the Digital Economy.

The Unemployment Challenge

“The greatest priority for the EU and the EU institutions must be to tackle youth unemployment,” Martin Schulz, President of the European Parliament, said. He also called for more and better investment opportunities. Furthermore, Mr Schulz highlighted that migration remained a major challenge for Europe and that the EU would need to increase its resources to manage migration flows.

Eurozone Suffers Integration Fatigue

Former European Commissioner Lord Mandelson warned that one could not understand the policy choices that Europe must make without understanding the political mood in Europe, “which has become much more volatile and a much greater influencing factor than in the past”. He said that Europe was certainly recovering from the crisis but this recovery was a fragile one, and we would need to understand the political consequences of this. “What matters is how Europe transitions from crisis management to long-term structural reform,” he said.

Lord Mendelson mentioned that Europe had the fiscal resources to manage this change, but “it doesn’t yet have the political means to re-distribute money between countries.” This continued to make the eurozone vulnerable, and “we will have no alternative but to deal with the architectural design flaws of the EU,” he said. The problem though, Lord Mendelson pointed out, is that “The need for deeper integration has been exposed when the public in Europe is experiencing integration fatigue.” Today, euroscepticism was not solely a British issue. To counter this trend, the focus should shift on the competitiveness of the European industry, he proposed. “We also need to adopt our social model to the new demographics, and this will be the toughest challenge between now and 2020.”

The Need to Build Bridges

The challenge for integration in the EU beyond 2020 was based on three bridges, according to former Italian Prime Minister Mario Monti: between north and south especially in the eurozone, between the UK and the rest of the EU, and between the EU and its citizens. The former Prime Minister challenged the perception that the economic crisis originated in the south. “It was Germany and France with complicity of Italy in 2003 that caused it when they breached the Stability and Growth Pact, without the agreement of the European Commission but whose council members allowed it. And then these same member states did not allow other member states to breach the pact,” he said.

Mario Monti emphasised that, with the exception of Malta, Italy was the only south European country that had emerged from the crisis without receiving aid from the European mechanisms. He said that during the last years the south European economies had made huge progress, describing as successful the culture of the social market economy combined with fiscal discipline and structural reforms. Italy’s former Prime Minister also proposed that the UK should take a different approach in the run up to the 2017 referendum on its EU membership. “I hope that the UK will take the offensive and say ‘we would be happy to work with you but only if you take single market openness, reform and competition seriously’. I think this would work much better than the defensive position currently being adopted.”