Authors Iain Begg | Gabriel GlÃ¶ckler | Anke Hassel ... - The Europaeum

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signals are in place to promote a new wave of low-carbon investment. The era and rhetoric of tax competition may well be at an end. But there will be inevitable rows and tensions between different views of how all this should be done, laced naturally enough with vested national interests. The ratification of the Lisbon Treaty is likely to result in greater formalisation of the Eurogroup, but with what consequences for policy is unclear. At present, however, there is no sign that the crisis will result in a centralisation of fiscal authority. The French and Germans have shown little interest in such a move up to now. But the EU needs to establish a new consensus on what should be the sound principles of public finance for the period ahead. To say that there is no need for fundamental change in the EU’s Growth and Stability Pact is to argue that the EU should take no effective position at all. What might be done? The issue is urgent as several member states, including Britain and Germany, are contemplating significant legislative and constitutional change to their fiscal policy regimes. Meaningful targets for each member state could be framed on the basis of a sustainable long term debt to GDP position with much greater transparency on whether current fiscal policies are consistent with achievement of the long term target. The key requirement is to agree on rules whereby an adequate portion of the proceeds of restored growth is steadily devoted to reducing national debt, without attempting a fiscal consolidation at such speed that growth itself is stifled. In judging progress towards member state compliance with a revised set of fiscal rules, there is a strong argument to be made that the quality as well as the quantum of public expenditure needs to become a guiding principle. Some argue that “social investments” like research, university spending, training and early years education should be protected from fiscal restraint if they can be shown to deliver high economic and social returns. This raises the issue of whether an operational definition of what constitutes “social investment” is feasible. But there is a bigger question of what will be the wider purpose of new fiscal rules. Leading economists argue that the Euro area, as a zone of low inflation, is one of the areas of the globe that can lead the world out of recession. In this dimension of economic policy coordination, the position of Germany is crucial. With its strong balance of payments and dominant position as the motor of the European economy, Germany needs to be persuaded that a prudent decision to expand its own economy will not lead to significant inflationary risk nor profligacy elsewhere, or 22 After the crisis: A new socio-economic settlement for the EU
increase the chances that the German taxpayer will be expected to bail out others’ mistakes. Berating the Germans about their failure to take the expansionary steps that they could afford is unlikely to yield much success. However, a grand bargain at EU level is possible whereby other member states agree reforms that Germany is arguing for. What might such a package look like? It would certainly include: n Tougher common rules for financial regulation, including the bonus issue. n The possibility of greater tax coordination, if not tax harmonisation in certain exceptional circumstances. n Implementation of a radical EU budget reform to make Structural Fund payments conditional on benchmarks of progress in economic reforms that would need to be agreed individually with member states. Germany as the largest contributor to the EU budget stands to gain from such an approach. A big political uncertainty is whether the recession will be long-lasting and as a result, whether parts of Europe will be engulfed by a serious social crisis. Much of Europe’s impressive employment growth in the “noughties” was in the second tier labour market of insecure jobs with inadequate protections and employment rights. These workers are now bearing the brunt of the recession. The labour market “inner core” remain in a relatively privileged position. As a result will this seem even more indefensible than it was before? This offers the Commission the opportunity to sharpen the debate in favour of a more balanced “flexicurity”, which should be the EU’s counter to the risk of a reversion to a “work-sharing” psychology. Would a social crisis – combined with populist outbursts against labour migration in parts of the Union– result in a comprehensive new look at EU social policy? There is undoubtedly a need for more social reforms at member state level, given the manifold social challenges facing Europe – the ever-present threat of protectionism and fear of globalisation; rising unemployment, especially among youths and graduates; the polarisation of labour markets between “lovely and lousy” jobs; citizens in new member states struggling to service debt as their ailing national currencies depreciate – not to mention others. Priority must be given to policies that improve life chances for children and young people to tackle emerging problems of generational inequity. New “social bridges” Chapter 1 – Roger Liddle 23
Page 1 and 2: Authors Iain Begg | Gabriel Glöckl
Page 4 and 5: Published in 2009 by Policy Network
Page 6 and 7: 4 After the crisis: A new socio-eco
Page 8 and 9: 6 After the crisis: A new socio-eco
Page 10 and 11: Simona Milio is associate director
Page 12 and 13: Chapter 10 Simona Milio ...........
Page 14 and 15: Before the crash: the EU as a parti
Page 16 and 17: liberalisation. The City of London
Page 18 and 19: of the Financial Services Action Pl
Page 20 and 21: confidence and world trade, to whic
Page 22 and 23: following the ECJ’s controversial
Page 26 and 27: need to be constructed to create ac
Page 28 and 29: or indeed re-impose, what they rega
Page 30 and 31: Markets with rules The overall conc
Page 32 and 33: 30 After the crisis: A new socio-ec
Page 34 and 35: Target financial stability The EMU
Page 36 and 37: Belgium, the Netherlands and Luxemb
Page 38 and 39: mortgage banks and the insurance se
Page 40 and 41: financial market rules. The ESFS au
Page 42 and 43: prudential regulation - though only
Page 44 and 45: initiatives vis-à-vis ratings agen
Page 48 and 49: Even if membership in a monetary un
Page 50 and 51: emained relatively contained to spe
Page 52 and 53: The second channel of functional sp
Page 54 and 55: But even so, the depth and intensit
Page 56 and 57: governance in the EU and the euro a
Page 58 and 59: in the EU show, authorities at the
Page 60 and 61: factors will remain prevalent and b
Page 62 and 63: centralised decision-maker. Similar
Page 66 and 67: (GNI), the interests of the member
Page 68 and 69: terms only very slowly and as a per
Page 70 and 71: policy proposal asks itself what th
Page 72 and 73: ensure that a ceiling is put on the
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Reform of EU expenditure Spending 4
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The medium-term financial framework
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unanimity. The need to obtain the c
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therefore, was weakening the Europe
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for the signing of the strict and d
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Since then, member states have name
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in the world monetary system. It al
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a Treaty that not only ignores trad
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88 After the crisis: A new socio-ec
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Firstly, they should include policy
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emanate from demographic trends. Ho
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Furthermore, the Lisbon agenda may
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Strengthening, if not really crafti
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incentives in the welfare schemes a
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security, yet at a lower cost than
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102 After the crisis: A new socio-e
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asis only in the 1990s, and over th
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in an increasingly global age the
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So what kind of social role for the
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effective common policies in areas
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help by ensuring a thorough audit a
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irrespectively of benefit and costs
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to the European Innovation Scoreboa
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flexible labour regulation than cou
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to cope with change is germane to a
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average job tenure figures in the E
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(74), and road vehicles (78). On th
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Towards a less dogmatic approach Wh
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will be reinforced rather than cont
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Where do we come from? The EU agend
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However, so far the flexicurity app
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existing practices of wage subsidie
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minimum wage tend to have higher pr
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commitment for employment”, 18 un
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provisions for minority protection,
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eflected in the objective of the Li
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instruments have been criticised fo
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However, the countries’ planning
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ich developed country pre-occupatio
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emerging markets (indeed the rules
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Energy and carbon use depend on fou
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concentrate on the size of the cake
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esurgence of long-term unemployment
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22 Financial Services Authority (FS
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7 This idea is not new. The 1970 We
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33 Arpaia, Alfonso, Declan Costello
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9 See Garabiol-Furet, M.-D. (2006)
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Chapter 11 1 Victor, D.G. (2006)
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Authors Iain Begg | Gabriel GlÃ¶ckler | Anke Hassel ... - The Europaeum

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