Let’s use the new EUphoria to tackle Europe’s root problems

Frankly Speaking

Picture of Giles Merritt
Giles Merritt

Founder

Europe’s greatest challenges are those that politicians avoid debating.

 

The pendulum of public sentiment in Europe has swung from deepest gloom to something amounting to ‘EUphoria’. This good news may be dangerous if it raises unrealisable expectations, but it is also a not to be missed opportunity.
A key development has been French President Emmanuel Macron’s election, crowned this weekend by the success of largely novice candidates for his La République En Marche party, which won more than 60% of the seats in the National Assembly.
Another turn-up has been the chaos engulfing UK politics, with Prime Minister Theresa May’s bungled general election raising doubts about Brexit. It certainly won’t be the clean break she’d wanted, and it may not even happen. All bets are off until the situation clarifies.
Then there’s Donald Trump. The President of the United States is erratic, wrong-headed and unwelcome, and yet he’s doing more to unify European Union governments and promote Europe’s shared values and solidarity than anyone could imagine when he took office six months ago.

Europe’s greatest challenges are those that politicians avoid debating

So European public opinion is warming once more to the EU. A poll of 10,000 people in ten major countries by the respected US-based Pew Research Center sees a sharp rise of appreciation in France, Spain and Germany, where over the last five years support at times slumped to between 50% and 40%. There, favourable opinion has risen, respectively, to 56%, 62% and 68%. And, astonishingly, in the UK 54% of respondents gave it a thumbs-up.
A renewed effort by the EU to tackle its shortcomings might well fall on fertile soil. There’s much to be done if the ground lost over the past decade is to be recovered. As well as reforming the eurozone so that the single currency becomes unassailable, the EU’s institutions and decision-making procedures must be overhauled.
But Europe’s greatest challenges are those that politicians avoid debating. To admit them risks votes and the loss of their own power, yet they are long-term, structural and deeply troubling.
As we all know, Europe is ageing fast. What the politicians don’t warn us against is that within 25 years the ratio of taxpaying workers to retirees will have gone from today’s four-to-one, to two-to-one. EU countries’ shrinking workforces may conceivably be buttressed by artificial intelligence, but the robots that might fill humans’ jobs don’t pay taxes or consume goods and services.
Politicians avoid telling us these hard truths because the solution is increased immigration. Some forecasts suggest we will need 100 million newcomers by mid-century to keep the active labour force stable, but that carries enormous risks of social and political disruption. A determined European-level strategy must therefore be put in place if racial and religious tensions are not to reach danger levels.
That means handling surges of refugees and economic migrants, and integrating newcomers more efficiently than to date into society and labour markets. It also requires a new approach to Africa’s economic development if we are to ensure that the population explosion there, from 1.2 billion people to 2.5 billion by mid-century, doesn’t lead to unstoppable waves of illegal immigrants.

Slow growth in Europe is seeing dwindling tax receipts and cutbacks in social spending

Coming up with an effective response will be all the harder because Europe’s voters don’t want Brussels to be involved. Pew’s survey showed that between two-thirds and three-quarters of people in European countries want their national governments, not the EU, to ‘control’ migration.
That’s not the only crucial area where Europeans are still unconvinced of the need for collective rather than national action. The EU’s member states have dragged their feet for decades on cross-border industrial policies and R&D budgets. In that time, Europeans’ high-tech leads have been eroded by Asian competition: By 2023, China will overtake Europe on innovation and patents.
At present, the EU’s laudable focus is on security, with a ‘defence union’ promised as the antidote to Trump’s lukewarm approach to NATO. Yet Europe’s greatest insecurity is economic. A stagnant and even shrinking workforce, coupled with waning international competitiveness, promises even lower GDP growth rates than at present.
Slow growth in Europe is seeing dwindling tax receipts and cutbacks in social spending. Governments could cut through this vicious circle by capitalising on the new EUphoria while it lasts. A celebrated John Maynard Keynes dictum is that unpalatable reforms are best undertaken in good times, not bad. Now is the time to take his advice.

 

 

The updated paperback edition of Giles Merritt’s book ‘Slippery Slope; Brexit and Europe’s Troubled Future’ (Oxford University Press) is published on 22 June and will be widely available in the UK and in leading Brussels bookstores.

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