The European Union (EU) has faced a series of unprecedented challenges over the past five years, including the COVID-19 pandemic and the ongoing war in Ukraine, which have significantly impacted its economy. As the EU's institutions enter the final phase of their current mandate, key figures are weighing in on how to address these turbulent times. Despite the challenges, Paolo Gentiloni, the EU's Economy Commissioner, believes that Europe is on the right course. Meanwhile, analysts and Members of the European Parliament (MEPs) debate strategies for economic recovery and growth.
Over recent years, the EU has implemented groundbreaking measures in response to these crises, including mechanisms like SURE and NextGenerationEU. These initiatives aim to stabilize economies across Europe by providing financial support and encouraging investment in key areas, such as the Green Deal. The EU's commitment to public investment through these measures is expected to persist, fostering long-term sustainability.
Analyst Jeromin Zettelmeyer from the Bruegel Economic think tank suggests that debt-sharing will remain a significant tool for Brussels to achieve its primary targets. He notes a positive economic outlook with inflation decreasing and real incomes expected to recover by summer.
"The ECB is expecting to get back to target sooner and they are also expecting to loosen, sometime in the coming quarter. And so there is sort of a sense that there will be a turnaround in the summer, and the main driver here is that real incomes are recovering with inflation coming down, wages catching up." – Jeromin Zettelmeyer
However, the EU's debt burden remains a contentious issue. Some voices on the right advocate for returning to traditional fiscal thresholds, with deficits at 3% and debt at 60% of GDP. The EU's institutions have enjoyed greater flexibility in managing debt reduction, but concerns persist.
Paolo Gentiloni acknowledges these challenges but emphasizes that the EU's high debt levels are not insurmountable and can be addressed strategically.
"As a whole, we can’t say that the problem of the EU and the euro area is that we have a too high debt, it’s a problem for single member states, we have to address it, we have to compete at global level.” – Paulo Gentiloni
Meanwhile, MEP Michiel Hoogeveen of the European Conservatives and Reformists Group warns against over-reliance on shared European debt.
"Right now, if you have highly indebted countries, but they are able to tap into this new box of Pandora, which is European common debt, where they are able to tap into that, well it creates a whole new ballgame when it comes to finances, so we believe that it's a mistake and we should not go down that road.” – Michiel Hoogeveen
As the EU navigates its economic future, its relationship with China has come under scrutiny. MEPs are calling for a more cautious approach to trade relations with China, advocating for a balance between maintaining economic ties and protecting European markets.
"We have to keep the economic ties, so nobody wants to stop them, but we have to rebalance that and in such a strategic battle with the Chinese we should be ready to defend our markets." – Manfred Weber
Philippe Lamberts MEP warns against naivety in international relations.
"The first thing is, stop being naive" – Philippe Lamberts
"I mean China is protectionist, the US is protectionist, and then we would say, ok well, we should not restrict access to our market because they will restrict access to theirs. They are restricting access to theirs!" – Philippe Lamberts
The NextGenerationEU fund offers prospects for future collaboration across member states. Philippe Lamberts emphasizes the need for borrowing to fund vital investments in areas such as green transition and digital transformation.
"If you want the investments that are needed for the green transition, for digital, for defence and all the rest of it to happen, yes, we will need to borrow because not all of it will be able to be funded by cuts elsewhere or by new taxes, and indeed some of it should be national borrowing and some of it should be joint borrowing by the European Union." – Philippe Lamberts
MEP Stéphanie Yon-Courtin also stresses the importance of strategic partnerships while adhering to established rules.
"Above all, the European Union must stop being naive. The relationship has to be one of trading partners, and of course, continue to work with partners as long as they accept our rules." – Stéphanie Yon-Courtin
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