E3G

Europe in the World: Summer Briefing

By Chris Littlecott

Europe’s Choices

E3G’s conversations across Europe show there is broad support across the political spectrum for strengthening Europe’s global role. However, this is often seen as a philanthropic exercise to be addressed once internal problems have been solved rather than as an increasingly essential means of securing the political and economic conditions needed to restore and maintain the fundamental values of Europeans. To move beyond philanthropy Europeans must be able to make political choices that are at present simply not on offer from its existing political organisations.

E3G has identified five sets of choices which would help set an agenda for this new European vocation:

1. Redefining Success: Europe must choose confidence instead of anxiety; quality instead of quantity. Europe must redefine the meaning of economic success in order to deliver prosperity and confidence into the future.

Europe has no choice but to go through a demographic transition from rising to falling population. The question is how well we manage the process. The criteria for success cannot be raw GDP growth rates; these will obviously fall as growth in the European workforce slows and then falls. This will make European growth numerically only two thirds of the USA even if productivity growth and labour utilisation is identical. Building confidence in Europe’s economic future requires a political reframing of growth in terms of its quality rather than simply its quantity. This will be necessary to create the basis for a new social bargain. It should be underpinned by meaningful measures of sustainable prosperity such as well-being, income stability, environmental quality and social mobility. It should focus on managing the real assets underpinning the future success of the European economy: intellectual and human capital, social cohesion, and the effective provision of global public goods.

2. Building Intergenerational Cooperation: Europe must choose to build a new intergenerational contract between young and old instead of entrenching defensiveness and disillusionment. Europe must agree a fair sharing of future risks between the generations or it will fail to invest in a sustainable future.

The critical political fault line in the future will not be between insiders and outsiders in the labour market, or between labour and capital, but between generations. Younger people shoulder the fiscal burden of an aging society, but have less economic security; while the economically established face lower prices and higher returns on their investments. Increasingly tight environmental constraints will need to be managed by a younger generation which has not benefited from the era of cheap fuel, and who will bear the direct legacy costs of climate change, environmental disasters, water shortages and biodiversity loss. Unless a new politics of Europe generates intergenerational cooperation then more young people will leave for low tax economies, and those that remain may reject higher investment in the public goods needed to secure Europe’s long term future; either to tackle climate change and energy security, or to invest in the political stability of Europe’s neighbourhood. The intergenerational cooperation essential for social cohesion needs to be built now, and be manifested immediately in new patterns of investment in efficient and intelligent infrastructure that does not leave built-in environmental liabilities for the next generation.