Unite, defend, grow: Memos to the European Union leadership 2024-2029

Foreword

The Memos to the European Union leadership have been a Bruegel tradition since 2009. Every five years – after the European elections but before a new European Commission takes office – we take stock of the state of affairs of policies related to EU economic prosperity, reflect on the main challenges facing the EU and make recommendations on
how the new EU leadership should address them. Except for the two opening memos– one to the Presidents of the European Commission, European Council and European  Parliament, the other to the High Representative of the Union for Foreign Affairs and Commission Vice President – the memos are addressed to incoming commissioners responsible for specific policy areas. As Commission portfolios relevant to economic prosperity have grown in scope, so have our memos. This edition covers 18 individual policy areas in addition to the two flagship memos, up from 11 in 2009 and 2014, and 14 in 2019.

By coincidence, each election to the European Parliament in the last 15 years – and hence each edition of our memos – was roughly aligned with a turning point in the EU economy. The 2009 memos were written after the global financial crisis had hit Europe with full force, but before the onset of the euro debt crisis (a risk that we clearly flagged). In 2014, the crisis had been overcome, but unemployment remained high, banking systems weak
and Economic and Monetary Union governance reforms were a work in progress. Five years later, the EU had succeeded in significantly reducing unemployment and lowering the risk of renewed financial instability. But the challenge of invigorating medium-term growth remained and the EU was confronted with new challenges: mounting geopolitical
tensions, the need to accelerate the green transition and the social consequence of digital transformation. Accordingly, our 2019 memos implored EU policymakers to be ‘braver, greener, fairer’.

During the past five years, the EU has faced two unprecedented economic and political crises: COVID-19 and the war in Ukraine, a European country bordering four EU member states. From an economic perspective, these two crises were much better managed than the crises of 2010-2012. Weeks after the onset of COVID-19 in 2020, the EU initiated
NextGenerationEU, a groundbreaking temporary recovery instrument. And in 2022, shortly after gas supplies from Russia were cut, the EU was able to organise itself partly by jointly procuring gas from alternative sources. Yet, like in 2014, the EU economy is recovering too slowly and medium-term growth prospects remain weak.

Many of the problems we face today reflect a return to longer-term challenges that were already visible before the latest string of crises: growth, geopolitics, green transition, social cohesion. It is not surprising that Commission President Ursula von der Leyen’s political guidelines, issued before her re-appointment in July 2024, overlap to a significant degree with her 2019 political guidelines. But the external and internal conditions under which the EU needs to tackle these long-term challenges are significantly more adverse than they were in 2019. Geopolitical threats are much more acute, with a direct security threat at the borders of the EU in the context of a less-dependable United States, and a more aggressive and authoritarian China. Economic nationalism has become entrenched, threatening the multilateral order. Higher energy prices have hurt growth and competitiveness. Fiscal needs have grown, but fiscal space has shrunk. The effects of climate change have become acute, but the pace of emissions reductions is far too slow, particularly outside the EU. Parties representing political extremes have gained support at both national and EU levels, making it harder to chart a way forward. This darker backdrop is reflected in the title of our memos. Today’s challenges are, first, to unite EU countries and citizens behind a shared agenda. Second, to defend the EU from external threats and EU values from corrosion. Third, to grow: in economic terms, but also in the sense of successful enlargement to new members.

What policy recommendations follow? The answer depends on each policy area, but it is possible to identify a few general themes. First, the EU should not jump on the nationalist bandwagon (even collectively). Multilateralism, openness and competition remain cornerstones of EU prosperity and essential to its credibility in the world. Second, the
EU cannot be naïve: it must assign much greater priority to both national and economic security. Support for Ukraine remains a top priority, as does higher investment in defence. Third, improving the single market is even more important than in the past: it is one of the few things that the EU can do that creates no trade-off between growth and security. This includes the creation of a single market for defence production – which should include the United Kingdom. Fourth, the EU must persevere with its European Green Deal. But this can only succeed if it preserves industrial competitiveness and ensures that vulnerable groups are protected. Fifth, the EU must pay far greater attention and devote more resources to partnerships with developing countries, focusing on the Sustainable Development Goals and including the provision of help to those countries to accelerate emissions mitigation.

Most important, the EU must be creative and bold: in this sense, ‘braver’ applies to this edition of the memos even more than to the 2019 edition. It must do more with less: the needs are overwhelming and public resources are scarce. This implies that political red lines preventing coordination and single market deepening must be challenged when the efficiency gains from doing so are high (as in energy policy, the digital economy, services trade, defence and capital markets). Closing public investment gaps in European public goods cannot be reconciled with fiscal consolidation unless a greater share of investment is undertaken and financed at EU level. And the EU must find creative ways to conduct industrial policy that do not fragment the single market or weaken the rules-based international system. In these and other areas, the memos offer specific recommendations.

As in previous editions, each memo is self-contained. The opinions expressed are those of the authors of each memo: Bruegel does not have an institutional view. Readers may nonetheless find the arguments and recommendations broadly consistent and coherent. This reflects extensive discussions among authors and across memos; a review process overseen by Katja Knezevic, Bruegel’s head of communication, and ourselves; and – most importantly – the steady hand and discipline imposed by Stephen Gardner, Bruegel’s indispensable, long-serving editor. To the extent that our 20 memos have a consistent style and clarity of argument, it is his achievement.

Maria Demertzis, André Sapir and Jeromin Zettelmeyer
Brussels, 1 September 2024