Download publication

External Publication

A Primer on Developing European Public Goods: A report to Ministers Bruno Le Maire and Olaf Scholz

This report was prepared for the French and German Ministers of Finance.

By: and Date: November 8, 2019 Topic: Macroeconomic policy

The EU has mostly been defined as a provider of economic integration. The single market and the euro were both integration-driven. In a context transformed by technology, global and regional challenges, and geopolitical change, time has come to give renewed priority to European public goods – policies and initiatives whose value to the citizens are higher when conducted at EU rather than at national level. These are:

  1. Foreign economic relations. When security is at stake, the EU should have the power to block a foreign investment by QMV; promote the internationalisation of the euro through the granting of swap lines to partner central banks and the introduction of a common safe asset; and move towards a consolidated euro-area representation at the IMF.
  2. Climate change mitigation. All sectors should be part of a European regime based on the ETS or a carbon tax system.The EU should be able to set by qualified majority binding corridors for carbon prices and to sanction infringements to jointly determined decarbonisation plans. It should contribute to offsetting the social costs of the transition.
  3. Digital sovereignty. The EU needs to pool its resources to protect cybersecurity and digital sovereignty. A high-level group should propose measures for the single market and avenues for closer cooperation amongst a subset of counties.
  4. Research and development in large and risky projects. A European DARPA should focus exclusively on pathbreaking projects – without consideration for distribution across countries – and be able to terminate unsuccessful projects abruptly.
  5. Development cooperation and financial assistance to third countries. Chinese inroads have made the case for a common development approach stronger.The EU should choose between bolstering the out-of-area mandate of the EIB and leveraging its participation in the EBRD.
  6. Migration policy and the protection of refugees. Refugees come to Europe, not to a particular member state. A lasting solution should include a common border protection system, a common legal framework for asylum, common principles for allocating persons to whom asylum has been granted, and common policies for resettling persons to whom immigration have been denied. This implies moving ahead with a subset of countries. Eventually, the Schengen area the common migration policy area will coincide.
  7. Foreign policy and external representation. The case fora European approach is strong, but mechanisms alone are not sufficient to overcome deep policy divergences. We propose three practical steps: initiatives to strengthen the European soft power, savings-oriented back-office cooperation, and regular European Foreign Policy White Books.
  8. Military procurement and defence. A way forward for European defence is variable geometry. Progress should be made towards common procurement, shared infrastructures, common arms export policies and joint defence initiatives.

The enhanced provision of European public goods requires additional funding, but it should not increase the overall tax burden for EU citizens. The overall tax burden should decline if public goods are more efficiently provided at European than a national level. But more resources would need to be shifted to the European level. While there is an ongoing debate about the financing of the EU budget, we propose to disconnect the provision of new European public goods from longer-term issue of reforming EU finances. This implies funding European public goods through higher GNI-based resources in the EU budget.

 To bring momentum to the project of enhancing the provision of European public goods, we propose that France and Germany undertake to start the following bilateral projects:

  • A common agency and a common research institute for cybersecurity;
  • A common fund for supporting breakthrough innovation;
  • Joint armed forces and a uniform arms system;
  • A joint strategy for African development;
  • A Franco-German chair at the IMF.

 

External publications have not passed the editorial process of Bruegel and are republished under the sole responsibility of the authors. 

 

Read about event More on this topic
 

Upcoming Event

May
25
14:30

How can we support and restructure firms hit by the COVID-19 crisis?

What are the vulnerabilities and risks in the enterprise sector and how prepared are countries to handle a large-scale restructuring of businesses?

Speakers: Ceyla Pazarbasioglu and Guntram B. Wolff Topic: Macroeconomic policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read about event More on this topic
 

Upcoming Event

May - Jun
31-1
10:30

MICROPROD Final Event

Final conference of the MICROPROD project

Speakers: Carlo Altomonte, Eric Bartelsman, Marta Bisztray, Italo Colantone, Maria Demertzis, Wolfhard Kaus, Javier Miranda, Steffen Müller, Verena Plümpe, Niclas Poitiers, Andrea Roventini, Gianluca Santoni, Valerie Smeets, Nicola Viegi and Markus Zimmermann Topic: Macroeconomic policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels
Read about event
 

Past Event

Past Event

[Cancelled] Shifting taxes in order to achieve green goals

[This event is cancelled until further notice] How could shifting the tax burden from labour to pollution and resources help the EU reach its climate goals?

Speakers: Niclas Poitiers and Femke Groothuis Topic: Green economy, Macroeconomic policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 12, 2022
Read about event More on this topic
 

Past Event

Past Event

How are crises changing central bank doctrines?

How is monetary policy evolving in the face of recent crises? With central banks taking on new roles, how accountable are they to democratic institutions?

Speakers: Maria Demertzis, Benoît Coeuré, Pervenche Berès, Hans-Helmut Kotz and Athanasios Orphanides Topic: Macroeconomic policy Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: May 11, 2022
Read article Download PDF More by this author
 

Book/Special report

European governanceInclusive growth

Bruegel annual report 2021

The Bruegel annual report provides a broad overview of the organisation's work in the previous year.

By: Bruegel Topic: Banking and capital markets, Digital economy and innovation, European governance, Global economy and trade, Green economy, Inclusive growth, Macroeconomic policy Date: May 6, 2022
Read article Download PDF
 

Policy Contribution

European governance

Fiscal support and monetary vigilance: economic policy implications of the Russia-Ukraine war for the European Union

Policymakers must think coherently about the joint implications of their actions, from sanctions on Russia to subsidies and transfers to their own citizens, and avoid taking measures that contradict each other. This is what we try to do in this Policy Contribution, focusing on the macroeconomic aspects of relevance for Europe.

By: Olivier Blanchard and Jean Pisani-Ferry Topic: European governance, Macroeconomic policy Date: April 29, 2022
Read article Download PDF More on this topic
 

Working Paper

The low productivity of European firms: how can policies enhance the allocation of resources?

A summary of the most important policy lessons from research undertaken in the MICROPROD project work package 4, related to the allocation of the factors of production, with a special focus on the weak dynamism of European small and medium-sized enterprises (SMEs).

By: Grégory Claeys, Marie Le Mouel and Giovanni Sgaravatti Topic: Macroeconomic policy Date: April 25, 2022
Read article More on this topic
 

External Publication

What drives implementation of the European Union’s policy recommendations to its member countries?

Article published in the Journal of Economic Policy Reform.

By: Konstantinos Efstathiou and Guntram B. Wolff Topic: Macroeconomic policy Date: April 13, 2022
Read article Download PDF More on this topic More by this author
 

Working Paper

Measuring the intangible economy to address policy challenges

The purpose of the first work package of the MICROPROD project was to improve the firm-level data infrastructure, expand the measurement of intangible assets and enable cross-country analyses of these productivity trends.

By: Marie Le Mouel Topic: Macroeconomic policy Date: April 11, 2022
Read about event More on this topic
 

Past Event

Past Event

Macroeconomic and financial stability in changing times: conversation with Andrew Bailey

Guntram Wolff will be joined in conversation by Andrew Bailey, Governor of the Bank of England.

Speakers: Andrew Bailey and Guntram B. Wolff Topic: Macroeconomic policy Date: March 28, 2022
Read article
 

Opinion

European governance

How to reconcile increased green public investment needs with fiscal consolidation

The EU’s ambitious emissions reduction targets will require a major increase in green investments. This column considers options for increasing public green investment when major consolidations are needed after the fiscal support provided during the pandemic. The authors make the case for a green golden rule allowing green investment to be funded by deficits that would not count in the fiscal rules. Concerns about ‘greenwashing’ could be addressed through a narrow definition of green investments and strong institutional scrutiny, while countries with debt sustainability concerns could initially rely only on NGEU for their green investment.

By: Zsolt Darvas and Guntram B. Wolff Topic: European governance, Green economy, Macroeconomic policy Date: March 8, 2022
Read article More on this topic More by this author
 

Opinion

The week inflation became entrenched

The events that have unfolded since 24 February have solved one dispute: inflation is no longer temporary.

By: Maria Demertzis Topic: Macroeconomic policy Date: March 8, 2022
Load more posts