Blog Post

After the elections: New European leadership needs to focus on results

Voters across the European Union have given a loud signal in the European elections that they are unhappy with their economic and social situation. The EU and in particular the euro area suffer from two key problems.

By: and Date: May 26, 2014 Topic: Macroeconomic policy

Voters across the European Union have given a loud signal in the European elections that they are unhappy with their economic and social situation. The low turn-out reflects the mistrust between the citizens and their Union, and especially in France the voters’ message has been strong. Brussels is perceived as far-away, technocratic, wasteful and ineffective.

As European leaders meet this Tuesday at the European Council meeting for an exchange of views, we therefore believe they should focus their discussions on issues that are central to delivering better results to citizens.

The EU and in particular the euro area suffer from two key problems.

  1. Growth and job creation is unsatisfactory and one can therefore not say that the crisis is over.
  2. The governance of the European Union is still far too complicated and ineffective to address crises and respond to citizens’ needs.

A key message and mandate EU leaders should give to the post-election EU would therefore be to focus on what can actually be accomplished.

The new European leadership consisting of the President of the European Commission, the President of the European Council and the President of the European Parliament should be able to act forcefully on growth. This will require the three individuals and their institutions to work together effectively. They will have to constantly remind the national leaders about the importance of enacting national reforms that not only create jobs but are also consistent with the prerogatives of monetary union. Putting public finances on a sound footing is one of the many challenges.

But without a European growth initiative it will be hard to deliver on domestic fiscal targets. Therefore, the new EU leadership should develop a convincing European growth strategy. The EU heads of state and government therefore should not only elect a leadership that is able to deliver results but it should also give a strong mandate to the new EU leadership to focus on results. For this, a reform of the European Commission is indispensable so as to better coordinate European initiatives across different policy areas.

The second prerogative is to initiate a reflection process on how to reform further the European governance and the distribution of competences. Concretely, the leaders will have to re-assess the fields of shared competences and national competences. The UK and others are right in fostering a review of competences. Too many directives, regulations and confused communications come from Brussels and are of little value to the citizens of the EU. Brussels will have to focus again on those policy areas, where EU spillovers are large.

So the mandate for the new leadership should be about reflecting on which areas should be deepened with more European decision making necessary while at the same time accepting that in other areas the reformed EU should play a smaller role. We believe that eventually the euro area will need a small fiscal union with strong democratic foundations. However, this fiscal union can only be credibly called for if the current EU budget is radically reformed to focus on growth and jobs instead of ineffective redistribution.


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