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The European Union at a fork between integration and a market only policy
Matteo Prioschi, journalist of Il Sole 24 Ore
As the global economic influence of the EU declines, there are concerns over which path to take in the near future given a choice between moderate interventions and cries for a stronger cooperation.
As Britain begins to negotiate the conditions of its exit from the European Union, the Netherlands and France have contained the impact of political movements favoring an exit from the EU; meanwhile, for the 60th anniversary celebrations of the Union, the European Commission published a White Paper questioning the political, economic and administrative future of the continent.
After acknowledging the choice of the British and the pro-Europe vote of both Dutch and French citizens, the fundamental question on if and how to change the European Union remains open for debate and requires a response. The last ten years have been particularly difficult due to the economic and financial recession that has highlighted the limited capacity for response and action of the EU as we know it today, with an obvious discontent in a number of countries followed by the rise of a number of autonomist movements.
As stated in the White Paper, "trust in the Union as well as national authorities has progressively dropped. Currently about one-third of all EU citizens trust the EU, against about 50% ten years ago. Bridging the gap between promises and results is a continuous challenge".
A few figures might well illustrate what will happen in the near future. Today, according to the White Paper, Europe has the largest single market in the world and the second most used currency. However, in 2004, the European Union, with Great Britain, accounted for 31% of the world’s GDP, which dropped to 26% in 2015, and should settle at around 20% by 2030. Residents in 1960 were 11% of the world's population, in 2015 the figure dropped to 6% and will drop to 4% by 2060. In addition, from an average of one lifetime job, in just one generation the average soared to 10 jobs in a lifetime. These few indicators shed light on how the EU's global influence will change affecting life within the Union.
In this context, the European Commission suggested five possible scenarios, or five different paths, in order to face what the future will bring. The document, rather than giving out possible solutions, contains assumptions aimed at fuelling the debate. "Carrying on" considers sticking to the programmed reforms following the current guidelines; "Nothing but the single market" targets the market reducing community regulation (for example, in areas such as social, environmental and fiscal norms); in the third scenario "Those who want to do more do more", a group of Member States may decide to enter into increasingly binding agreements, while the others will retain a lower level of integration; "Doing less more efficiently" involves identifying a number of specific areas in which all countries can make their contribution towards greater integration, while other areas would remain untouched; "Doing much more together", on the other hand, involves a greater cooperation by all Member States and in all sectors.
The idea of a single digital access point to the market launched by the EU Commission in early May is a clear indication of the current limits and future prospects. At present, the possibility of living, working, and doing business in another EU country still poses some difficulties. By creating a single digital access point, a single Internet website, clearly and easily identifiable, could facilitate procedures on at least thirteen cross-border activities, such as registering for social security services, starting and registering a business, the payment of social security contributions for the employees. Individual States will still be responsible for these procedures at a local level, however the greater accessibility will be instrumental in saving time and money. The aim remains the same, reducing barriers; if, in fact, these new procedures will make it easier for an Italian company to do business in other EU countries, it will likewise provide the opportunity to easily access the Italian market.
Based on the five previously mentioned scenarios outlined in the White Paper, one might assume that this initiative could be strengthened in some areas or, perhaps, even all of them, harmonizing at least the main procedures, so that registering a new business will require only a few standard easy steps for all countries or, on the contrary, the decision might be to leave things just as they are.
After all, in all the five scenarios proposed by the Commission, the economic environment will be subject to some improvements, at least on paper. Whether the choice is to “carry on” or aimed at promoting "nothing but the single market", the latter will still be reinforced. From a “strictly business” point of view, the hypothesis laid down on the White Paper might seem to be quite neutral. However, what needs to be evaluated is whether other areas of developments may be considered, and in what way these will have an impact on the single market. For example, it would be interesting to see if the implementation of a greater monetary co-operation (the euro area) along with the creation of an economic, financial and budgetary union can lead to further benefits through joint investments, capital market integration and tax coordination, or even if the management of borders, migratory flows and security, will be functional to the development of both the market and social life.
After acknowledging the choice of the British and the pro-Europe vote of both Dutch and French citizens, the fundamental question on if and how to change the European Union remains open for debate and requires a response. The last ten years have been particularly difficult due to the economic and financial recession that has highlighted the limited capacity for response and action of the EU as we know it today, with an obvious discontent in a number of countries followed by the rise of a number of autonomist movements.
As stated in the White Paper, "trust in the Union as well as national authorities has progressively dropped. Currently about one-third of all EU citizens trust the EU, against about 50% ten years ago. Bridging the gap between promises and results is a continuous challenge".
A few figures might well illustrate what will happen in the near future. Today, according to the White Paper, Europe has the largest single market in the world and the second most used currency. However, in 2004, the European Union, with Great Britain, accounted for 31% of the world’s GDP, which dropped to 26% in 2015, and should settle at around 20% by 2030. Residents in 1960 were 11% of the world's population, in 2015 the figure dropped to 6% and will drop to 4% by 2060. In addition, from an average of one lifetime job, in just one generation the average soared to 10 jobs in a lifetime. These few indicators shed light on how the EU's global influence will change affecting life within the Union.
In this context, the European Commission suggested five possible scenarios, or five different paths, in order to face what the future will bring. The document, rather than giving out possible solutions, contains assumptions aimed at fuelling the debate. "Carrying on" considers sticking to the programmed reforms following the current guidelines; "Nothing but the single market" targets the market reducing community regulation (for example, in areas such as social, environmental and fiscal norms); in the third scenario "Those who want to do more do more", a group of Member States may decide to enter into increasingly binding agreements, while the others will retain a lower level of integration; "Doing less more efficiently" involves identifying a number of specific areas in which all countries can make their contribution towards greater integration, while other areas would remain untouched; "Doing much more together", on the other hand, involves a greater cooperation by all Member States and in all sectors.
The idea of a single digital access point to the market launched by the EU Commission in early May is a clear indication of the current limits and future prospects. At present, the possibility of living, working, and doing business in another EU country still poses some difficulties. By creating a single digital access point, a single Internet website, clearly and easily identifiable, could facilitate procedures on at least thirteen cross-border activities, such as registering for social security services, starting and registering a business, the payment of social security contributions for the employees. Individual States will still be responsible for these procedures at a local level, however the greater accessibility will be instrumental in saving time and money. The aim remains the same, reducing barriers; if, in fact, these new procedures will make it easier for an Italian company to do business in other EU countries, it will likewise provide the opportunity to easily access the Italian market.
Based on the five previously mentioned scenarios outlined in the White Paper, one might assume that this initiative could be strengthened in some areas or, perhaps, even all of them, harmonizing at least the main procedures, so that registering a new business will require only a few standard easy steps for all countries or, on the contrary, the decision might be to leave things just as they are.
After all, in all the five scenarios proposed by the Commission, the economic environment will be subject to some improvements, at least on paper. Whether the choice is to “carry on” or aimed at promoting "nothing but the single market", the latter will still be reinforced. From a “strictly business” point of view, the hypothesis laid down on the White Paper might seem to be quite neutral. However, what needs to be evaluated is whether other areas of developments may be considered, and in what way these will have an impact on the single market. For example, it would be interesting to see if the implementation of a greater monetary co-operation (the euro area) along with the creation of an economic, financial and budgetary union can lead to further benefits through joint investments, capital market integration and tax coordination, or even if the management of borders, migratory flows and security, will be functional to the development of both the market and social life.
