The EU is at risk of death from myopia

Frankly Speaking

Picture of Giles Merritt
Giles Merritt

Founder

If the European Union were to die, some might expect its death certificate to cite inertia. But myopia looks more likely. Short-sightedness risks becoming the European project’s terminal sickness.
“I don’t want to belong to a generation of sleepwalkers,” said France’s President Emmanuel Macron in Strasbourg last week. Underlying his speech to the European Parliament was the message that the solutions to yesterday’s problems are no longer suited to those of tomorrow. It’s a theme that other policymakers and political leaders across Europe should be repeating over and over again.
The long-term difficulties that confront Europe are daunting, and if public opinion can be made aware of them, the grip on voters of populist parties would be substantially weakened. But first, a simple truth.
The weakening over the past decade of the drive for greater European integration has nothing to do with poor political leadership, and everything to do with economic conditions. The EU’s national leaders are habitually blamed, but the reality is that austerity policies following the 2008 financial crisis and low-growth, no-growth across Europe have locked politicians and their voters into a risk-averse mood.

Failure to do that puts the whole European project at risk of decline and gradual dismemberment

It is important that we Europeans should grasp this point, because long-term trends point to continuing slow growth unless radical new policies are implemented. The goal must be to kick-start European economies back to the higher growth rates that led to the single market, the euro and the EU’s ‘Big Bang’ enlargement.
Failure to do that puts the whole European project at risk of decline and gradual dismemberment. “Not with a bang but a whimper,” as the poet T.S. Eliot wrote of the way the world ends.
What, then, are these trends that myopic Europe urgently needs to focus on? The most obvious is demographic decline, but hard on its heels are technological vulnerability, waning living standards and rising social tensions. All are well-known but widely ignored.
Politicians intent on getting elected are reluctant to cast themselves as doom-laden Jeremiahs, or Cassandras. Journalists respond to the public appetite for news but not education. That’s doubtless why the grave implications of Europe’s ageing receive so little attention. The fact that in only a decade from now something like 40% of the EU population will be over-65s is seen as a healthcare and pensions problem.
Yet that’s only the tip of the iceberg. Far more alarming is the shrinkage of the European workforce. Some might welcome that as good news for younger job-seekers, but that’s wrong. The EU-28 workforce of 240m people will number only 207m by mid-century if immigration stays at present levels, but could fall disastrously to only 169m if it is slowed or even stopped. Taking 33m taxpayers and consumers out of the European economy over three decades would be extremely damaging, while over 60m people would be catastrophic

Giving a fillip to the European economy is essential if a spiralling political and economic collapse is to be avoided

Europe needs to start right now on planning ways to counter its demographic decline. Average incomes are already only two-thirds those of Americans, and on course to drop to three-fifths. Giving a fillip to the European economy is essential if a spiralling political and economic collapse is to be avoided.
That boost would come from a bold and determined investment strategy across Europe aimed at education, health and housing. If eurozone governance reforms were discussed in the light of borrowing to build a more resilient Europe, then the reservations of northern European governments could be allayed. The modest ‘Juncker Plan’ for €315 billion to be spent on infrastructure should be seen as a mere pilot.
The key point is that more hospitals, schools and houses are needed to accommodate both Europe’s ageing population and also the new blood that immigration can bring. The Keynesian pump-priming effects will re-energise sluggish economies and thus ensure that the EU project recovers its ambitious forward momentum.

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