Five priorities for the EU

written by Angela Knight on 16/01/2012

The European Union faces some major decisions later this month. The eurozone currency crisis is just one of the problems facing the union as it works to restore financial stability and begin the process of economic recovery.

At every step the EU seems to face new problems – whether it be the credit rating downgrades we saw last week or the reported disagreements in the Greek debt restructuring talks. And it is clear that the speed of decision-making in the EU is much slower than the markets are demanding.

But for all our sakes – our international trading partners as well as our fellow EU members – it is imperative that the European Union rises again to take its place as one of the major trading blocs in the global economy.

As we see it, the EU decision-makers now have five pressing priorities:

• Strengthening fiscal arrangements in the eurozone in support of the single currency;
• Developing stabilisation tools to address short term challenges;
• Maintaining the single market across the EU, with a renewed focus on growth;
• Reforming financial regulation on the basis of evidence, carefully calibrated and in step with the international community; and
• Demonstrating budgetary discipline in the European institutions themselves.

Underlying all of these is the need to test all public policy decisions against the single goal of economic growth.

The eurozone crisis is the biggest single challenge facing the EU, and perhaps the biggest danger to the global economy. The need for decisive progress on this is imperative. But that does not mean the policymakers should choose now as the time to make unrelated changes to the EU Treaty in respect of financial regulation and other aspects of the single market. Last month’s European Council meeting concerned itself not only with resolving the eurozone crisis but also creating a new common legal framework for the single market (including financial regulation, labour markets and taxes). The outcome was inevitably confusion: a discussion that was meant to be concentrated on measures to resolve the eurozone crisis spilt over into other issues which could have waited for another day.

In all of this we need also to stress the importance of the single market. The single market is the engine of the region’s growth, and it will be the source of its economic recovery, so we need to refocus our sights on this. What is required is a constructive and decisive debate between those who believe that Europe can develop on an inward-looking basis and those who view the economic interests of Europe’s citizens as being much better represented by an outward-looking Europe capable of competing in the world’s markets. In other words, we need to focus the debate on the outcomes we want for the single market, not the processes and mechanisms underpinning it.

And we need that decision soon: the markets – and the prospect of economic recovery – will not wait.