Working paper

Instruments of economic security

The challenge of improving European economic security has grown in importance, with various relevant policy measures introduced at EU level

Publishing date
23 May 2024

Geopolitical and economic developments, including Russia’s invasion of Ukraine and trade disruptions during the COVID-19 pandemic, have raised concerns about the European Union’s exposure to hostile countries. The challenge of improving European economic security (which we narrowly treat here as exposure to foreign trade or production shocks) has grown in importance, with various relevant policy measures introduced at EU level.

Focusing in particular on the threat posed by economic coercion, this paper begins by assessing the nature of this threat, before outlining two lessons that can be drawn from two recent instances of this coercion in action: China’s actions against Lithuania and Australia respectively. First, while much of the policy debate has focused on imports, the threat to EU exporters should not be ignored. Second, while coercion may not cause any macroeconomically significant harm, this may mask severe impacts on the targeted industries, which should be considered in any policy responses.

The EU has significantly added to its policy tools in this area, though some of the instruments introduced under the umbrella of economic security go beyond the definition we consider. An effective response should be built around: building a deeper understanding of the risks facing the EU; improving diversification of both exports and imports; using targeted industrial policy in the limited sectors where the risks warrant intervention; and managing and limiting the fallout of any shocks using ex-post instruments.

This working paper is based on McCaffrey, C and N. Poitiers (2024) ‘Instruments of economic security’, chapter 6 in Europe’s Economic Security, Paris Report 2, CEPR and Bruegel. We would like to thank Alicia García-Herrero, André Sapir, Beatrice Weder di Mauro, Chad Bown, Heather Grabbe, Guntram Wolff, Jean Pisani-Ferry and Jeromin Zettelmeyer for their comments and discussion and Luca Léry Moffat for excellent research assistance.

About the authors

  • Conor McCaffrey

    Conor works at Bruegel as a Research assistant. He studied Philosophy, Political Science, Economics and Sociology in Trinity College Dublin for his undergraduate degree, where he specialised in Economics and studied in Tilburg University for a semester. He also holds an MA in Economics from the Vancouver School of Economics in the University of British Columbia, Canada, and his thesis considered the impact of welfare reforms on educational outcomes in the UK.

    Prior to completing his Master’s degree, Conor completed a traineeship in the European Parliament, where much of his work was focused on the Special Committee on Foreign Interference in European Democracies. He also worked as an intern in the Institute for International and European Affairs in Dublin, and held roles as both a Research Assistant and a Teaching Assistant over the course of his Master’s degree. He is particularly interested in labour and public economics.

    Conor is a native English and Irish speaker. 

  • Niclas Poitiers

    Niclas Poitiers, a German citizen, joined Bruegel as a research fellow in September 2019.

    Niclas' research interests include international trade, international macroeconomics and the digital economy.  He is working on topics on e-commerce in trade as well as European trade policy in global trade wars. Furthermore he is interested in topics on income inequality and welfare state policies.

    He holds a Ph.D. in Economics from Universitat de Barcelona, a M.Sc. in economics from the Universität Bonn, and a B.Sc. from Universität Mannheim. During his Ph.D. he was a visiting scholar at Northwestern University.

    Niclas is fluent in English, Spanish, and German.

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