Download Capitalising upon the EU`s Economies of Scale

Capitalising upon
the EU’s Economies of Scale
Mr Guy Verhofstadt
After a long period of economic growth and European
integration in the 1950s and 1960s, our continent then faced
fifteen years of high unemployment and jobless growth.
It was also a period in which there was a lull in European
integration and a number of Member States suffered from
weak democratic institutions. German economist Herbert
Girsch dubbed this situation ‘eurosclerosis’.
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© European Parliament
Europe was only cured of its disease when the Delors
Commission tabled a White Paper that contained 300 concrete
measures which, eventually, led to the Single European
Act (1986). Building upon this the Single Market came into
force on 1 January 1993 allowing the free movement of
goods, services, capital and labour. Companies had been
anticipating this leap forward in European integration for
several years and the Single Market meant the beginning of
a new era for Europe: one with growth and jobs. In practical
terms this represented 2.77 million new jobs, an increase in
GDP for the EU27 of around 2.13% and an average of €500 in
extra income for each person by 2008.1
Today, Europe is stuck again in a period of zero growth and high unemployment. We need
to look for new opportunities to capitalise upon the potential economies of scale the EU
has to offer. How might we do this?
First of all, we need a real banking union and a fully integrated capital market. This is
in order to restore the transmission mechanism between banks and the real economy.
A common bank resolution fund must be fully operational as soon as possible.
Secondly, the European Central Bank, the European Commission and the European
Investment Bank will have to jointly launch ‘future bonds’ in order to provide the necessary
funding for projects that have a real return on investment. These future bonds will pool
funds with private investors to address crucial missing links at the European level: in our
transport network, our energy grid, or digital infrastructure.
Thirdly, this new economic approach needs to be accompanied by measures that
strengthen European democracy in a concrete way – no big political philosophies, but
tangible results. The European Parliament, as the only directly elected body of the EU, needs
to be given a right of initiative and more budgetary responsibility. It is impossible to explain
to people that their representatives in Brussels cannot instigate their own legislation.
It is also crucial to have a European Commission that really makes use of its right of
initiative in an intelligent way, especially by using the internal market as a mechanism to
let the economies of our Member States converge and oblige them to work towards joint
goals – not as a diktat from Brussels through contractual arrangements, but by creating
common objectives, on pensions, labour markets, productivity, investment in research
and development, and education. Even if people do ‘not fall in love with an internal
market’, as Delors allegedly said, they fall in love with politics that delivers.
1
European Commission, 20 Years of the European Single Market: Together for new growth:
Publications Office of the European Union, Luxembourg, 2012, p. 13.