RE No. 10: Reviving the Promise of Prosperity in the European Union

At a Glance

The policy conundrum of how a pro-growth reform programme could be made deliverable by 2020 and appeal to electorates and decision-makers at the national and European level needs to be addressed against the backdrop of the multiple European crises and the political backlash against the ‘elites’ currently underway. The delivery timeframe excludes Treaty changes and the Brexit negotiations will bind capacities in the coming years.

Against this backdrop, the key argument put forward in this essay is that such a reform programme is best deliverable by focussing on the three mutually reinforcing areas of sovereignty and legitimacy, investment and financial innovation as well as on the vision of a digital social market economy for Europe. Legitimacy can be increased by rethinking multi-level governance in terms of ‘integrated subsidiarity’ and an investment strategy requires the recapturing of fiscal policy as a policy instrument. Financial innovations such as a Sovereign Wealth Fund (SWF) for the Eurozone could also play a positive role in addressing financial needs given a very favourable market environment. Investments in turn should be directed towards activating unused capacity and strategically setting the European economy up for the future while at the same time strengthening its character as a social market economy. Realigning public and private interests along the lines of ‘shared value’ capitalism would also help direct the vast innovation potential of new technologies towards the most pressing social, economic and environmental challenges.

Reforming the use of existing institutions and procedures and innovating where gaps exist provide a realistic framework to deliver a pro-growth reform programme in the coming years.