There are dark clouds on the horizon for the global economy. A recent report published by Global Trade Alert and the Centre for Economic Policy Research suggests that international trade is stagnating, as countries put up protectionist barriers and resort to “beggar-thy-neighbour” policies. Some economists predict recession in the UK following the Brexit vote, and the IMF has slashed its growth outlook for the Eurozone economies as well.
But could there be a silver lining? The EU-28 accounted for almost one quarter of global GDP in 2013 and, compared to much of the world, Europe can still boast a highly-educated workforce, good transport links and solid infrastructure, and strong institutions, including courts, watchdogs, ombudsmen, etc. Even without the UK, many Europeans will still enjoy a relatively high quality of life.
Are there also opportunities to improve EU competitiveness? Despite the creation of the single market, there are still barriers to trade in services, and removing them could boost GDP by almost 2%. Could there also be room for additional investment, particularly in terms of diversifying Europe’s energy sources and promoting clean and renewable energy? Would measures such as these be enough to kick-start Europe’s economy?
Curious to know more about competitiveness in the EU? We’ve put together some facts and figures in the infographic below (click for a bigger version).
We had a comment sent in from Alexander, offering suggestions about how to kick-start the EU economy, and make Europe competitive. He believed: “Regulations, high taxes and other location factors must be significantly improved in order to become competitive again.”
To get a reaction, we spoke to Marju Lauristin, an Estonian Member of the European Parliament (MEP), and Vice-Chair of the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament. How would she make the EU more globally competitive?
I think there are a couple of important things [to be done]. I will start with the area closest to me, that is: Digital Europe. We all have very, very strong feelings that the digital single market could be very beneficial for Europe, in terms of economic growth, jobs, and increased competitiveness in a globalised world. But to achieve that there is a lot to do, and not only in terms of new technology.
The most important thing is to remove all barriers to innovation. The worst obstacle we face is that we have too many borders inside countries, but also between countries. We have different levels of digital skills, different economic cultures, and also different levels of entrepreneurial skills. To build a digital single market, we need to break down these barriers.
For another perspective, we also spoke to Jean-Pierre Lehmann, Professor of International Political Economy at the International Institute for Management Development (IMD) in Switzerland. What would be his advice to the European Union?
I think one of the things that’s going to be very, very important is for Europe to make sure that it remains globally oriented, has a global mindset, and looks at opportunities on a global basis. There is a risk, in my opinion, that Europe is becoming too inward-looking, too smug, too complacent.
The future does not lie in Europe, the future lies outside of Europe. But the future of Europeans depends on the extent that they are able to seize the opportunities the outside world will offer; and there are lots of opportunities, whether it’s in terms of markets, in terms of technologies, etc. But Europe is not welcoming enough, or hospitable enough to its globally-oriented entrepreneurs, with the result that many leave.
What would make the EU more globally competitive? How can Europe kick-start its economy and seize opportunities around the world? Let us know your thoughts and comments in the form below, and we’ll take them to policymakers and experts for their reactions!