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

proposed in André Sapir’s 2003 report for the Commission, An Agenda
for a Growing Europe, and the advancing debate on “flexicurity”.
Until the crisis broke in the autumn of 2008, the prospects for radical
policy change were poor. This reflected an intellectual consensus that the
Single Market in legislative terms was near complete; that the euro had
become quickly embedded in its early years without a degree of turbulence
that fundamentally called its governance into question; and that social and
budgetary questions were in the classically “all too difficult” redistributive
category that member states had no appetite to grapple with. Given the
dominance of this view, it was taken for granted that the EU’s internal
development would more or less proceed benignly as a result of market
dynamics supplemented by the full exercise of the Commission’s powers
of implementation of existing legislation and the powerful liberalising
instincts of ECJ jurisprudence. The focus of policy attention in EU debate
shifted away from what seemed tired and stale internal questions of
economics and social cohesion to new and more compelling debates about
the EU’s role as a global actor. Then in autumn 2008 the global crisis
struck Europe with full force. A new question came to the fore: what will
change as a result?
Has the immediate reaction to the crisis been positive
or negative for the EU?
Against this background Europe’s initial reactions to the global
financial crisis were unsurprisingly complacent. Its impact was deemed
containable; the crisis itself a problem of “Anglo Saxon” financial
capitalism, originating in the US, with limited spillovers to the continental
economy. Clearly, some member states were more exposed like the UK,
Ireland and Spain which had seen an unsustainable house price boom
and growth in consumer spending. But the initial conventional wisdom
that the EU would be able to batten down the hatches and ride the storm
rather suited the ideological preferences of Continental political leaders:
the interpretation of the crisis as an Anglo-Saxon debacle both distanced
them politically from responsibility and strengthened the case for the
different approaches Continental Europeans were perceived to take to the
market economy.
This complacency did not, however, survive long as the seizing up of
the world financial system shook the banking system to its foundations
in Europe as much as the United States. The spread of the crisis from
Wall Street to Main Street triggered a sudden collapse both in consumer
Chapter 1 – Roger Liddle 17