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Leader: I. Begg
Objectives
The core purpose of this work package has been to explore, explain, extrapolate and evaluate policy
developments in key economic domains by analysing them as they evolve. Already, since EUCONSENT
was launched, we have seen a widespread demand for new thinking about “what the
EU is for” as an economic policy actor and where its limits should be drawn. In the aftermath of the
no votes in the French and Dutch referenda and the re-launch of the Lisbon strategy, “economic
Europe” seems to have taken a new direction with a greater focus on growth and employment and
an implicit down-grading of “social Europe”. Yet in many countries there is evidence of a backlash
against this shift, with many unanswered questions about how the social model(s) should evolve.
Economic and social policies are also confronted by well-known drivers of change that have to be
taken into account in assessing European economic integration. Demographic trends that will lead
to an ageing society accompanied by a marked shrinkage of the population in a number of countries
will need far more radical policy responses than have been forthcoming to date. The rise of
China and India as economic powers will lead to much more intense competition in global markets
for goods, services and investment, but also to an accentuation of environmental pressures.
Governance issues arise in all the main domains of economic and social policy. How soon to accede
to the Euro area is a challenge for the recently acceded Member States, but their arrival will
also prompt questions about whether the system as a whole is suitably configured. An important
aspect of the changes wrought since the Barroso Commission came to office is that Lisbon has
become a dominant paradigm, with other policy areas – such as cohesion – expected now to exhibit
greater focus on growth and employment, possibly at the expense of its traditional concern
with equity. It is also evident that awkward questions remain about the character of EU economic
policy-making. The Reform of the Stability and Growth Pact may have corrected some of the features
that had attracted most criticism, but there is still concern in many quarters that the demandside
is ill-equipped to confront the challenges posed by persistent unemployment in many Member States. Supply-side reforms have proceeded at different rates in different Member States, raising
questions about whether the methodology of policy making (notably the resort to the Open Method
of Co-ordination) is adequate. Here the relative success of some countries, including several of the
recently acceded members, can offer interesting insights to others.
In the area of the internal market, the general objective of more open markets continues to guide
policy, yet in many Member States opposition to, notably, the Services Directive has been considerable
and the Directive that was eventually agreed was considerably watered-down. This suggests
that the simultaneous widening and deepening can, by no means, be taken for granted, even
if in some areas completion of the integration can be anticipated. One battle-ground is the EU
budget where the overall size of the budget, burden-sharing and the composition of spending are
all under scrutiny, yet where – so far – debate has been conducted in the shadow of the negotiation
of the Lisbon Treaty and, now, its ratification or potential failure. New policy directions are also
emerging around the themes of flexicurity, climate change and energy policy, with ramifications
that stretch beyond the immediate agencies responsible for their implementation. At EU level, various
”mega-strategies” have been developed or re-launched since 2005, yet there is at times a lack
of coherence between them, let alone with wider aims.
In line with the broader themes of the network, the work package will continue to investigate how
widening and deepening influence policy trajectories and how the changing circumstances of the
EU economy affect options. The wide geographical spread of the EU-CONSENT network will facilitate
the pulling together of diverse perspectives on the nature of economic policy-making and the
scope for reform. This will allow WP VI to explore the three overarching scenarios of (i) a more
effective EU policy (ii) an accentuation of policy problems or (iii) a shift towards a new European
policy architecture. Building on this richer understanding of how policy has been, and is being,
shaped, proposals will be put forward for reform and new initiatives in the various domains, and
these ideas will be complemented by active engagement in the policy debate. This will be a
particular goal for the last year of EU-CONSENT and the work package will build on its strong
connections with both national and EU-level policy-makers, in analysing and advancing these
policy debates.
New literature:
New Budget, Old Dilemmas / Iain Begg and Friedrich Heinemann. - London : Centre for European Reform, February 2006 (CER Briefing Note)
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