Europe, the next 50 years

Written by Prof Alan Mayhew on Wed 28th Mar 2007

Alan Mayhew's Notes

'Europe, the next 50 years' Conference, Goodwood House.

Background

- look at the task of predicting the next fifty years in 1957 - who could have predicted that in 2007 the EU would have 27 members, that the Berlin Wall would have been built and torn down or that we would all have personal computers!

- impossible to talk about the next 50 years, things change ever faster, so I will talk about the challenges of the coming years (but not fifty)

The base year situation

- Econometricians predict the future on the basis of the past behaviour and the situation at present - so I will do the same.

- Above all the EU is a community of common values - underlined in the Treaty (and in the Berlin declaration)

- Fact that Europe has been at peace for the last 60 years is not trivial as some seem to suggest today and it is largely thanks to the EU and wise statesmen

- Now 27 MS after successful enlargements, Euro working well, internal market a success, beginnings of a serious foreign and defence policy

BUT

- EU going through difficult phase

short-term problems:

• Loss of the referenda in the Netherlands and France/ problems for institutional change

• EU institutions going through a period where they seem to have lost the confidence of the citizens

• reform of the budget

Medium and longer-term

• future enlargement

• Relatively poor economic performance in some of the core EU countries with high unemployment

• Lack of structural reform in some countries leading to calls for protectionism as reply to globalisation

• risks for the Euro

• energy and the environment

• longer term demography and migration

What will be the final shape of EU?

· first and second class - EURO as the incipient core-Europe

· far more flexibility

· dissolve into a FTA

I will look at just 3 problems

- future enlargement

- economic reform

- institutional change

1. Future enlargement

a. Fifth enlargement -was a success! New member states growing fast; EU-15 also benefited; UK migration strengthened UK economy

b. Who is waiting?

c. What is the legal position?

d. What are the problems:

i. Public acceptance/unemployment/economy

ii. Budget

iii. Institutions and efficiency

e. Why we can't stop

2. Economic reform

a. Can we work against Globalisation?

b. Lack of structural adjustment leads to:

i. Poor competitiveness of European companies on world markets

ii. Higher unemployment/locking people out of the labour market

c. Growth and prosperity depends on rising productivity, rising employment and technological progress

d. Problem of the European Continental Social Model

e. Lisbon Agenda

3. Institutions

a. Institutions are still essentially those from 1957

b. Still operating with 27 member states and there is little sign that they are operating less effectively, though the atmosphere may have changed

c. But obvious limits to efficient operation as numbers grow: could be 35 or more MS in two decades time.

d. Problem of large and small MS

e. Would the draft Constitution solve the problems?

i. More Qualified Majority voting

ii. Reduce the size of the Commission and limit that of the EP

iii. Change in Council voting system

iv. Subsidiarity etc.

f. More radical reforms

g. Using enhanced cooperation and increased flexibility

4. Conclusion

a. The medium- and long-term challenges for the Union are severe and will not be solved overnight

i. Institutional change is required to maintain efficiency: the Constitution is a start but may not be sufficient

ii. Economic reform is necessary to make the Union's economy more flexible faced with globalisation

iii. The demographic problem will not be solved by migration - it requires a trend rise in productivity as well as family friendly policies

iv. Enlargement should continue

b. It is above all the values of the Union which are important to defend and promote

c. In fifty years Europe will still be here and life will still be good: what is at stake is our capacity to influence world events and our relative prosperity

March 28, 2007