The EU needs to rediscover its ambition

The EU has faced a series of economic challenges in recent years, which have brought significant political and social impacts – but the signs are that Europe is turning a corner. Continuing the series of articles by Burson-Marsteller’s senior advisors on the future of Europe, Miguel Ferré urges the EU to show leadership in defining a way forward.

The past decade has been the messiest in the European Union’s history, and I have seen its turmoil at close quarters. But for that, my faith in the European project is stronger than ever. And as the EU searches for a new role, I can only urge our leaders to rediscover their ambition.

I am not an impartial observer: I believe in Europe wholeheartedly. Yet as a Spanish state secretary for finance in between 2011 and 2016, I had a ringside seat on the economic crisis that swept over the EU. It was not pretty. Economically, we all took a hit, with businesses suffering. The measures we took in Spain and the rest of Europe hurt. There were political consequences as governments collapsed. The social impact was painful.

The EU took a lot of blame for this. Many people said the euro had exacerbated the economic crisis, some even said the euro caused it. They said the single currency’s debt and deficit rules were too rigid to cope, and they were choking governments. They said the EU and Eurozone institutions were too weak to adapt to the new circumstances.

There was, in fact, no single euro crisis. There were different crises. The problems in Greece, with its huge debts, had almost nothing to do with those in Ireland, related to banking and property. In Spain, were the public debt was relatively low, the issue was about imbalances: we had a real estate bubble, with a high level of private sector leverage.

Structural reforms

We endured the EU’s excessive deficit procedure, which was widely seen as a German mandate. But the results came in after two or three years. Spain today is the Eurozone economy boasting the best competitiveness gains. We have new jobs, new business, and GDP growth of 3.2% in both 2015 and 2016. And for that, we can thank the EU: European governance combined with a political willingness from a new government pushed Spain into taking the plunge on structural reforms that were desperately needed.

These structural reforms have helped us in so many ways – and proved the importance of the EU.

So I am fully aware of the strains in the euro. But at the end of the day, the balance is very positive, and Spain is a very good example of where the EU can help.

We need to remind ourselves of this. Even the European Commission needs reminding, as it seemed to have forgotten the huge value of the EU when it published its White Paper on the Future of Europe earlier this year. The White Paper was a disappointment. It is the first time in my life that I’ve seen the Commission refuse to take a position on a key political issue. It is supposed to be the institution taking the lead, it is supposed to represent the European principles, yet it stood back.

I can see that this paper responds to circumstances like the rise of political populism. But the Commission should think of the long term. It is as clear now as it ever was that European citizens face challenges that national governments alone cannot deal with. There is no alternative to European action on issues like migration, economic and social cohesion, financial stability and climate change.

One of the lessons from the economic crisis is that we need a deeper fiscal union. The challenges we face require investment. We have new tools and new institutions, but more money is needed to face the challenges of globalisation, the changing economic circumstances and our aging populations. We can provide welfare and happiness, but we need a stronger EU budget. It may be €155 billion, but it is still only 1% of the EU’s combined gross national income. With more money to invest, in a coordinated, integrated manner, we can really make a difference. That is why it is only the fifth option in the White Paper, of doing much more together, that makes sense.

The signs are good

The European project is a worthy one, and must be kept on track. We should not be pursuing ideas like a two-speed Europe. We, as Europeans, should not derail our plans because of occasional political events, as circumstances and voters may change.

There are good signs. The election of Emmanuel Macron as French President is one: he believes in Europe, and his symbolic use of the European flag is impressive. The economic upturn will help.

Jean Monnet, one of the founding fathers of the European project, talked about the functional approach to integration, focused on common interests and shared needs. I still believe in that approach: the future requires stronger economic integration.

We need to go further in most of the policy areas where we are concerned. It makes no sense if a single country in, say, eastern Europe is much stricter in controlling immigration, if the others are not. We cannot have exclusively national solutions. We cannot go back to the pre-Maastricht situation: it makes no sense in the 21st century. We live in 2017. We need to do this as 27 EU member states.

We have, as Europeans, huge challenges for our sons and daughters. We must respond together. There is no room for isolated responses. But we need a clear understanding of our future. And our future is emphatically European.

 

Miguel Ferré is a Senior Advisor at Burson-Marsteller Brussels. He was the Secretary of State in the Spanish Ministry of Finance and Public Administration during some of the most difficult periods during the financial crisis, dealing with fiscal policy, designing the new tax code, and monitoring gambling activities. He has held many senior tax positions in the Spanish government, and served as a Financial Counsellor in the Spanish Permanent Representation to the EU in Brussels. He was also an International Tax Partner with PwC. He is currently also Senior Advisor at E&Y for Corporate Governance and Vice-president of the Global Corporation Centre.

Leave a Reply