Leadership can assume many shapes and can take on different forms, but it is always rare. This applies to individuals, organisations and, on a larger scale, economies, too.
In the current global geopolitical and economic landscape, well-defined leadership is difficult to identify. Europe can take advantage of this great opportunity and shape its future role in the world scenario. Global leadership, especially in socioeconomic terms, could become the shared goal of European citizens.
Despite French President Macron’s admirable efforts and robust stance in favour of a strengthened European Union, Europe lacks a common compelling and ambitious vision.
With approximately two out of three Europeans saying that they don’t see any advantage for their nations as a result of being a part of the EU, according to Deloitte, the process of integration is clearly suffering from a lack of confidence.
There is a malaise across Europe signaled by an increased polarisation between pro-EU and Eurosceptic parties, as Brexit showed. Naturally, part of this sentiment is reflected in the position of many European political leaders, who are reluctant to take decisive steps towards more united policies.
The opportunity of seizing the global leadership role could be the vision EU citizens need.
It wouldn’t be a far-fetched proposal. Europe is by far the world’s largest exporter and boasts nine out of twenty of the world’s most competitive national economies, according to the World Economic Forum.
Europe is at the forefront of environmental protection: two EU countries – Germany and Italy – rank as the world’s most energy efficient nations, and pollution per capita in Europe is much lower than in other developed economies. Sweden has declared it aims to rely entirely on renewable energy sources by 2040. Italy derives already almost half of its energy consumption from fossil-free sources.
Most of all, European countries share, by and large, the same advanced social aspiration. I’d like to call it the “European Way”. It’s set out in the Treaty of Rome, which 60 years ago paved the way for the European Communities: “promotion of employment, improved living and working conditions… proper social protection, dialogue between management and labour, development of human resources with a view to… the combatting of exclusion”.
This “European Way” brought peace and progress to the European people over the past decades. It’s a cultural identity that binds EU citizens and can support Europe’s vision of global leadership.
This vision is not easy to realise, though. For a start, Europe’s identity is undermined by political differences that look insurmountable and the continent’s economic performance has been lagging behind the US, let alone that of many developing economies.
I believe that removing the remaining barriers to a fully integrated European Union is key to addressing these issues. According to the European Parliament, if all single market policies were implemented, the potential in terms of efficiency gains for Europe would amount to a staggering €1.5 trillion, or more than 7.5% of EU’s GDP. The actions to liberate this potential are numerous and range from co-ordinated fiscal policies to a common defence and immigration strategy.
I’d like to single out those actions that are directed towards high-value-added factors, which determine productivity growth in advanced nations and allow a mature economy, like Europe’s, to maintain a certain level of wealth and inclusion in the long term.
I am thinking of the actions aimed at more unity in Europe’s services sector, which is relatively more creativity-intensive and attracts higher-skilled workers. Services are estimated to account for up to 80% of the EU economy, but only for 25% of its internal trade, according to the European Investment Bank. Adopting common policies in the services sector would contribute to liberating a significant potential to make Europe a leading force in knowledge-driven productivity.
Stronger unity is particularly needed with regards to digital tools, as each EU member state applies its own rules in terms of e-commerce, data protection, privacy, e-procurement and so on.
If fragmentation in the digital space is not eliminated, the cost Europe would bear adds up to more than €400 billion per year, and the continent would miss the opportunities offered by the Fourth Industrial Revolution. According to the World Economic Forum, low investment in information technology in Europe “has been found to account for a large part of the labour productivity gap between the EU and the United States”.
A capital markets union would also be instrumental to a more competitive economic system. As the increase in savings outweighed investments over the past six years, such a common project would encourage capital allocation in profitable endeavours throughout Europe thereby reducing the gap between savings and investments. Capital markets unification would ensure more sources of funding and contribute to stimulate young entrepreneurship and startups.
More integrated strategies governing the knowledge-based sector – combined with higher R&D spending (EU R&D spending, at roughly 2% of its GDP, is lower than that of Israel, South Korea, Japan, US and China) – are therefore vital to make sure the social model that makes our continent unique is sustainable over time.
Built on the “European Way”, Europe’s global socioeconomic leadership is a challenging but plausible objective. It is the vision Europe needs to restore confidence in the European dream and prevent this project of peace and prosperity from withering.