Transcript EMU

EUROPE 2020 AND
SUSTAINABLE DEVELOPMENT
Can it all be reconciled?
Iain Begg
European Institute, London School of Economics
POLICY CONTEXT: Promising?
Sustainable development a core Treaty aim, plus…
– Everyone is in favour of it

– Every policy has to embed it

…yet not much actually happens 
Establishment of EU “mega-strategies”
Growth and jobs (Lisbon strategy - 2005)
Energy security & efficiency; climate change
Sustainable Development (revised June 2006)
NS for Social Protection and Social Inclusion
– Adds up to significant, yet ‘sub-Treaty’ reform
WHAT WE KNOW IS COMING
Demographic change
– The relative ageing of the population
Challenges of labour supply: the vexed issue of immigration
The funding legacy left to the next generation(s)
– Implied shifts in economic structures
Care, health, ‘grey’ consumers
The necessary shift to a low-carbon economy
– Prospect of new vectors of inequality
A notion of ‘carbon justice’ as well as social
Globalisation as an enduring challenge
– Ramifications for fiscal sustainability of social model(s)
– Potential ‘demands’ on global governance
STRATEGIC DIRECTIONS:
What needs to be reconciled?
“Wagner’s music is
better than it sounds”
A metaphor for EU coordination
processes?
SUPPLY-SIDE REFORM
•Multiple goals
•Knowledge economy
•…but also ‘green’
•Competitiveness
•…but also fairness
•Diverse starting-points
MACROECONOMIC AIMS
•Nurturing recovery
•Maintaining stability
•Global policy linkages
ALL IN A SINGLE,
CREDIBLE AND
SUCCESSFUL
CO-ORDINATION
PROCESS…!!
DISTINCTIVE MODELS
•Social, including labour
•Financial systems
•Regulatory traditions
UNCERTAINTY PRINCIPLES
Connections to sustainability
A central feature of capitalist economies
– Unpredictable outcomes
Security as the antithesis of uncertainty
– Economic impacts minimised
– Social consequences mitigated:
Employers, workers and flexicurity mechanisms
The socially excluded
– Climatic effects controlled
Risk-taking
– Lessened by too much uncertainty?
– Consequences for entrepreneurial activity
VARIANTS ON SUSTAINABLE
Macroeconomic
– Growth that avoids current imbalances
– But provides for future developments
Environmental – obviously
– Resource use
– Costs of abatement/mitigation
Social – much more amorphous
– Overlap with macroeconomic on pensions
– But separate inclusion/cohesion agenda
FIVE “JUSTICES” TO PURSUE
Social, incorporating investment and protection
Carbon – burden-sharing on emissions cuts
Historical – who caused the problem
Current – who is aggravating it
Developmental: the energy-GDP correlation
– China stance on development first, curbs later
Inter-generational
Meeting the needs of the present
Without compromising needs of future generations
Knowledge – can intellectual property be pooled?
SCENARIOS FOR POST-2010
Scenario 1 – A bump in the road
– Recovery takes hold quite rapidly
Unemployment peaks well before post-2010
– Limited change in underlying trends and drivers
>> Growth and jobs focus continues
Scenario 2 – Enduring recession or ‘lost decade’
– Risks of long-term unemployment and exclusion
– Policy focus on mitigating adverse effects
>> Links between employment & social enhanced
Scenario 3 – Reinvention: towards new model
– Active intervention to re-shape the economy
>> Sustainable development & low carbon paradigm
MACROECONOMIC GOALS
Difficult choice of exit strategy
– Timing, with the risk of adverse spillovers
– Manner: fiscal leading monetary …or vice versa
– The spectre of inflation
Need to stress quality of public finances
– Spending better, but substantially less
Growth enhancing programmes
– Locking-in future savings – recasting pensions
Debt reduction & winding-down imbalances
EUROPE 2020 THEMES
Commission paper of 03/03/10
Recognition of challenges of exit from crisis
– Integration of Europe 2020 and Stability & Growth Pact
Main headlines for policy co-ordination
– Smart growth: knowledge & focus on innovation
Education, research, creativity
– Sustainable growth: green and competitive
Lower energy intensity; industrial policy?
– Inclusive growth
New skills allied to cohesion
Emphasis on ‘second generation’ flexicurity approaches
>> Yet weak in explaining ‘why Europe?’
KEY QUESTIONS FOR EU
Selling a post-2010 narrative for policy
– Countering climate change as obvious one
Chimes with public mood
– Maybe, also, a reinforced social dimension
One-size-fits-all targets or differentiation?
– Is it time for customised guidelines, targets, etc.
Joined-up governance for Europe 2020
– Co-ordination and budget must work in tandem
Defining EU role is, hence, politically tricky
– Key is, therefore, political leadership