Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum

Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum Authors Iain Begg | Gabriel Glöckler | Anke Hassel ... - The Europaeum

europaeum.org
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14.11.2014 Views

liberalisation. The City of London strengthened its dominance as Europe’s major financial centre, apparently unaffected by the UK decision not to the join the Eurozone, though benefiting greatly from the increased momentum of European economic integration. Strong catch up growth, meanwhile, took off in the new member states, particularly the Baltics, Slovakia and Poland, suggesting that the central and eastern enlargement would lead to rapid convergence as it had in the case of the Cohesion Four. The December 2005 European Council agreement on the EU Financial Perspective for 2007-13 significantly increased EU Budget transfers to the new member states to support public investment in that catch-up. Free movement of labour within the enlarged EU facilitated above trend growth in member states such as Ireland, Spain and the UK, strongly suggesting that if all restrictions on free movement were to be lifted when the current 7 year transition period comes to an end in 2011, there would be overall benefit to the Union. As for social cohesion, enlargement profoundly altered the character of the EU without much serious analysis of the economic and social implications thereof. It greatly increased ethnic and religious diversity as well as geographical disparities between EU regions. Average income per head ranged from a high of 290% of the EU average in London to a low of only 27% in north east Romania. Within the EU15, the wage share in national income declined in many member states and measures of inequality and child poverty grew. But Europe saw nothing like the increase in inequality that occurred in the United States. Rather increases in inequality in Europe appeared member state specific and episodic rather than part of a general trend. 2 Worryingly, though, within the Eurozone macroeconomic structural divergences grew. Whereas in the period up to the establishment of the Euro, the convergence criteria acted as a discipline on fiscal policy, once the euro was in being, these disciplines were relaxed and countries like Greece and Portugal began to accumulate unsustainable deficits, while Spain enjoyed an unsustainable housing boom as a result of the euro sharply loosening the domestic monetary conditions. Despite this record of on the whole improved economic performance, with the single (though admittedly large) exception of energy policy and climate change, the momentum for policy integration slowed the entire economic and social field. Only modest progress was made in strengthening Eurozone governance. The rules of the Stability Pact underwent pragmatic revision and were made more flexible and intelligent, but it remained only 14 After the crisis: A new socio-economic settlement for the EU

the smaller weaker member states who really felt they had to take notice. Also, the Eurogroup elected a permanent President in the person of Luxembourg’s Jean Claude Juncker but still lacked effective single external representation. It was striking how in the EU’s intra-institutional debates on the Constitutional and Lisbon Treaties, very little attention was paid to economic questions as opposed to improving the EU’s effectiveness as a “global actor”. Internally, debate focused on the justice and home affairs agenda, not economics. Governance and political will have arguably failed to keep pace with economic integration. The Lisbon process was in part conceived as an alternative to the classical focus of integration. Yet though it was re-launched with a flourish at the start of the Barroso Commission in 2004, it failed to engage political attention or deliver high-profile results. Lisbon’s bolder ambitions were clearly beyond reach, even in 2004: the 2010 deadline had always been overambitious, especially given the EU10 enlargement. One valid criticism of Lisbon was that the initial goals were inadequately specified or prioritised. The Barroso Commission attempted to narrow the focus to “growth and jobs” as recommended by the Kok report. However, pressures within the Council and Parliament soon widened them again. More seriously, the German refusal to contemplate the “naming and shaming” of member states failing to reach their targets meant that delivery depended on an opaque partnership between the EU and its member states that lacked real political purchase. In terms of further market liberalisation, services have the most economic potential as they constitute some 60% or more of the EU economy. In the latter days of the Prodi Commission, Frits Bolkestein, the Dutch liberal Commissioner responsible for the Internal Market, convinced his colleagues that the way to liberalise “services” was through an omnibus measure based on codifying in EU law the founding freedoms of the Rome Treaty. This broad based approach liberalising a vast range of economic activity from sensitive “public services” such as health and social care, to high value added professional services, ran into immediate political difficulties. The Services Directive that eventually emerged was substantially amended – strict economic liberals would say watered down – by the European Parliament. This demonstrated the limits of political will to drive Single Market purism beyond goods. Beyond that, there was sparse legislative achievement in harmonising internal rules and standards, not to mention questions of taxation, with the important exceptions of the passage of the REACH Directive and much Chapter 1 – Roger Liddle 15

the smaller weaker member states who really felt they had to take notice.<br />

Also, the Eurogroup elected a permanent President in the person of<br />

Luxembourg’s Jean Claude Juncker but still lacked effective single external<br />

representation. It was striking how in the EU’s intra-institutional debates<br />

on the Constitutional and Lisbon Treaties, very little attention was paid to<br />

economic questions as opposed to improving the EU’s effectiveness as a<br />

“global actor”. Internally, debate focused on the justice and home affairs<br />

agenda, not economics. Governance and political will have arguably failed<br />

to keep pace with economic integration.<br />

<strong>The</strong> Lisbon process was in part conceived as an alternative to the classical<br />

focus of integration. Yet though it was re-launched with a flourish at the start<br />

of the Barroso Commission in 2004, it failed to engage political attention<br />

or deliver high-profile results. Lisbon’s bolder ambitions were clearly<br />

beyond reach, even in 2004: the 2010 deadline had always been overambitious,<br />

especially given the EU10 enlargement. One valid criticism of<br />

Lisbon was that the initial goals were inadequately specified or prioritised.<br />

<strong>The</strong> Barroso Commission attempted to narrow the focus to “growth and<br />

jobs” as recommended by the Kok report. However, pressures within the<br />

Council and Parliament soon widened them again. More seriously, the<br />

German refusal to contemplate the “naming and shaming” of member<br />

states failing to reach their targets meant that delivery depended on an<br />

opaque partnership between the EU and its member states that lacked<br />

real political purchase.<br />

In terms of further market liberalisation, services have the most economic<br />

potential as they constitute some 60% or more of the EU economy. In<br />

the latter days of the Prodi Commission, Frits Bolkestein, the Dutch<br />

liberal Commissioner responsible for the Internal Market, convinced his<br />

colleagues that the way to liberalise “services” was through an omnibus<br />

measure based on codifying in EU law the founding freedoms of the<br />

Rome Treaty. This broad based approach liberalising a vast range of<br />

economic activity from sensitive “public services” such as health and<br />

social care, to high value added professional services, ran into immediate<br />

political difficulties. <strong>The</strong> Services Directive that eventually emerged was<br />

substantially amended – strict economic liberals would say watered down<br />

– by the European Parliament. This demonstrated the limits of political<br />

will to drive Single Market purism beyond goods.<br />

Beyond that, there was sparse legislative achievement in harmonising<br />

internal rules and standards, not to mention questions of taxation, with<br />

the important exceptions of the passage of the REACH Directive and much<br />

Chapter 1 – Roger Liddle 15

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