Less surveys, more reforms” “for economic recovery

A pivotal element emerges in contemporary Europe: it’s the constant, concrete, widespread concern linked to unemployment, decreasing family earnings, struggling enterprises, fluctuating national budgets. Even though a glimpse of light is visible at the end of the tunnel of the most severe recession of the past one hundred years – confirmed by the Winter Economic Forecasts released by the EU Commission a few days ago – a blatant, latent fear is nurtured across the Old Continent. One could paraphrase: “a ghost is hovering over Europe” in terms of unemployment, of its social repercussions, and of the fears of the great majority of workers and households in Europe. The “Forecasts” presented on February 25 by Finnish EU Commissioner Olli Rehn signal a modest, generalized GDP growth for 2014, due to increase in 2015, with remarkable differences across EU countries. EU economy and that of the Eurozone specifically, seem to have overcome their worst economic downturn, but major stumbling blocks, (such as unemployment, skyrocketing government debt, poor credit and investments, low internal demand rates), are yet to be removed. This situation is coupled by the fact that despite efforts carried out at EU level, authentic European economic governance is just rising over the horizon, when instead, strong single currency, coordinated budgetary and fiscal policies, the completion of the single market, Community investment for research and infrastructure, along with energy policy coordinated by Brussels, are direly needed to meet the challenge of global competitors. Given the situation, sound long-term European economy and successful EU integration, urgently necessitate policies capable of tackling all of the above-mentioned challenges. More Europe – of a different kind, namely, more efficient and more open – and more European politics – sheltered from protectionist and nationalistic stands that bring more votes but less future – are thus required. These could be items of debate for citizens-voters ahead of May’s European elections. Indeed, the political sphere had been called into question some time ago in the framework of an exhaustive survey carried out by the EU Commission titled “Quarterly Report on the Euro Area” (volume 12, n. 4/2013): a 50-page document with analyses and figures preceded by an editorial by the director general for economic and monetary policies Marco Buti. A “thorny” paper, whose evaluations were not – perhaps intentionally – “read out loud”. Having acknowledged the quarterly data of end 2013, Buti wrote: “Looking ahead, the medium-term projections for the Eurozone do not give grounds for excessive optimism”. As shown in the first chapter of the Report, under a “no-policy-change scenario” potential GDP of the euro area “is expected to grow on average by just above 1 % over the next ten years, i.e. around 1 pp lower than in the decade before the crisis”. “Over the same period, GDP per capita growth is expected to decline by more than 1⁄2 pp to less than 1 %”, which means decreased economic dynamism and lower salaries. The economic expert of the Commission added: “The encouraging message, however, is that the subdued growth outlook is not ‘set in stone’. The projections reported above are based on a “do nothing” scenario”; but “policy-makers can avoid the dire growth scenario by implementing reforms that contribute to enhancing the economy’s full potential”. Put simply, politics can play a crucial role, with reforms that will rise to the occasion, capable of changing the course of events in the medium and long term. Buti equally underlined a set of possible – albeit non-justifiable – reasons that are thwarting the much-needed reforms to rekindle the economic system of Euroland and of the EU as a whole. “First, reforms can involve choices that impact on organised interest groups”, namely, on various lobbies. “Second, their positive economic impact often only occurs with a considerable time lag, while in some cases there is a short-term (political) cost”, that is, when votes decrease. And as known, politicians cannot afford it to happen. It’s the same old problem: Europe and its member States, need innovative, forward-looking policies and brave politicians that don’t bend down to the latest electoral poll. There’s a road to take. It’s long, narrow, and uphill. But it’s right there.