Challenges and new beginnings: Priorities for the EU’s new leadership. EPC Challenge Europe Issue 22, September 2014

THIS DOCUMENT CONTAINS A COLLECTION OF ARTICLES WHICH ARE AVAILABLE ON THE ARCHIVE AS SEPARATE ARTICLES. There has been a lot of attention on the current transition of power taking place in Brussels. The new EU leadership will be confronted with a number of internal and external challenges. They will have deal with economic stagnation, the negative effects of fragmentation and the need to increase the Union's legitimacy. There is no better moment to take stock of the ‘state of the Union’ and to look ahead into the next European political cycle (2014-2019), focusing not on personalities but on content: what challenges do we face and what should the EU focus on in the coming years? These new beginnings will encounter new challenges, and who better understands the issues than some of the key players in European politics. Challenge Europe brings these players together and explores what social, political and economic challenges are facing Europe, and its’ citizens.

Sharing the same vision – The cornerstone of a new industrial policy for Europe. EPC Discussion Paper, 20 March 2014

Claire Dhéret argues in this discussion paper that Member States should seize the opportunity offered by the 2014 March European Council to pave the way for an EU industrial policy providing the industry with what it needs most: an unambiguous and well-defined strategic plan for the decades to come. To this end, the author set the contours of three possible policy scenarios for the future of EU industrial policy in view to fostering a debate about what form a coherent strategic framework should take.

Flashlight Europe No. 3, November 2014: European Social Policy? Prospects for the New EU Commission

Whilst the intricate set of national and genuine European competences is probably just as convoluted as it has always been, the expectations of EU citizens are nothing of the sort. This is especially true in the area of employment and social affairs. What they want from policymakers is social safety and risk protection. And whether these things are done on the European or national level is of little importance. We have studied the latest data on social justice in the EU in order to describe the most important tasks and challenges currently facing Marianne Thyssen, the new Social Affairs Commissioner.

Europäische Sozialpolitik? Von den Möglichkeiten und Grenzen der neuen EU-Kommission = Flashlight Europe No. 3, November 2014: European social policy? Prospects for the New EU Commission

No abstract.

Towards a New Industrial Policy for Europe. EPC Issue Paper No. 78, November 2014

An ambitious rhetoric has been adopted both at the European and national level towards industrial policy. Along with rhetoric, sweeping action plans to revive our industrial base and reverse off-shoring trends have been attempted. However, concrete measures undertaken have been inconsistent and weak compared to the magnitude of the challenges faced by European manufacturing as well as the policies implemented by our competitors. At the same time the economic and financial crisis has shed light on the risks of an excessive reliance on the service and financial sector and the necessity to look for new sources of growth. As a response, this Issue Paper, by Claire Dhéret, Senior Policy Analyst and Martina Morosi, Programme Assistant, argues that fostering a more innovative, knowledge-intensive, new technology-oriented and resource-efficient manufacturing industry in Europe is the right way to go. To this end, a new EU strategic vision on industrial policy, based on the operationalisation of European cooperation, is urgently required. The paper presents a toolkit for implementing the vision and a series of policy recommendations.

New Pact for Europe: Towards a New Pact for Europe. Second report, October 2014

As the new EU leadership takes office, Europe faces a complex web of economic, political, social and global challenges which require new responses – above all, the need to restore the public’s faith and trust after the years of crisis which have prompted growing dissatisfaction with the Union, with many people now seeing it as part of the problem rather than part of the solution to those challenges. In 2012, a consortium of 11 European foundations initiated by the King Baudouin Foundation and Bertelsmann Stiftung, and supported by the European Policy Centre, decided to launch a project to promote a Europe-wide debate on the future of EU integration: an ambitious participatory initiative whose ultimate goal is to develop realistic reform proposals to shore up a Union hit by multiple storms in recent years, which have left many people questioning its capacity to respond effectively to those challenges. Two years later, we are proud to be able to present the outcome of this endeavour: the result of a joint reflection process involving the public, politicians, policy-makers, business leaders, trade unionists, EU experts, opinion-formers and other civil society representatives in many EU Member States. Obviously, not all the ideas and proposals generated by this process could be included in this report, but we hope that it faithfully reflects the feedback we received in all the debates. The discussions we have had led to the report that you now hold in your hands, which calls for a New Pact for Europe – between EU Member States and between the EU and its citizens – to enhance the Union’s capacity to deliver effective solutions to the many challenges facing Europe, and to do so in a way that benefits all EU countries and groups within society. This report is designed to feed into the on-going discussions about the EU’s future as the new leadership team takes charge, providing what we hope will be seen as a valuable contribution to the debate on how to introduce ambitious while at the same time workable and realistic reforms to make the EU more effective in responding to the challenges we face. We hope that it will be taken up for discussion by the new European Parliament, the new leadership of the European Commission, European Council and European External Action Service, and also by policy-makers in the Member States. And it does not by any means mark the end of the process. The report will be discussed again with policy-makers and stakeholders in a majority of Member States. Their feedback is important to us and will impact the future progress of the initiative.

The growth challenge for Europe and the EMU. CHALLENGE EUROPE Issue 22- Challenges and new beginnings: Priorities for the EU's new leadership, September 2014.

The European economy is slowly and painfully striving to reemerge from the last six years of crisis. It was a crisis of enormous intensity and contagiousness, given the unprecedented depth of global financial integration combined with the systemic flaws in the EMU architecture. And it is not over, as the high levels of unemployment and the growing divergence between Member States testify. The threat of fragmentation is imminent as ever: fragmentation between euro-ins and euro-outs; fragmentation between North and South; fragmentation within societies, with increasing income inequality and a growing number of, what used to be, the middle class population slipping through the social safety net and below poverty lines. Policies of front-loaded fiscal consolidation have left welfare states in economically weaker countries severely underfunded. According to OECD data, the number of people living in households without any income from work has doubled in Greece, Ireland and Spain, and has risen by 20% or more in Estonia, Italy, Latvia, Portugal, and Slovenia. Fertility rates have dropped further since the crisis, deepening the demographic and fiscal challenges of ageing. There are long-term implications from these deteriorating trends, regarding people's long-term health, education and upward mobility from low-income families. It is also highly likely that many of the people unemployed for a long period of time will never again be able to gain proper access to the job market and build a normal career track. The enduring effects of the crisis risk creating vicious cycles of low growth, high debt levels, austerity, declining productivity, and stagnation. These developments carry heavy implications for the future growth prospects of the European economies, for future prosperity, and for the sustainability of pension systems and welfare states. They must be urgently reversed.

Strengthening the euro area. CHALLENGE EUROPE Issue 22. Challenges and new beginnings: Priorities for the EU's new leadership, September 2014

Since 2007, a series of acute crises have threatened the very existence of the euro area. The financial crisis which spilled into the currency union in 2007 was followed by an unexpectedly strong downturn of the real economy. As of 2010, the euro area was confronted with a severe sovereign debt and banking crisis. Despite these troublesome developments, the euro area has proven to have a considerable degree of resilience. In each phase, governance weaknesses were revealed – and national governments together with the EU institutions have designed an impressive series of policy responses in crisis management and institutional innovation. The euro area today is completed by a banking union with a Single Supervisory and a Single Resolution Mechanism. National budgetary and economic policies are more closely overseen and coordinated. With the European Stability Mechanism, the euro area now has a permanent tool in place to manage sovereign liquidity crises and instabilities in the banking sector. Most importantly, the euro area's only true federal institution, the European Central Bank (ECB), has become its most effective crisis manager: with the announcement of its Outright Monetary Transactions (OMT) programme, the ECB finally managed to calm the self fulfilling crisis in 2012. Meanwhile, the announcement of credit easing and quasi-quantitative easing in September 2014 is a move towards reducing financial fragmentation and countering deflation. The euro area in 2014 is hence a lot different from the one in 2007. And yet, further challenges need to be overcome. Prevailing stagnation, fragmentation and problems of legitimacy require a rethink of policies and further governance reform.

Social Europe. Can the EU again improve people's life prospects? CHALLENGE EUROPE Issue 22. Challenges and new beginnings; Priorities for the EU’s new leadership. September 2014

In the following, I will briefly review the main EU policies developed over the past five years in the field of employment and social affairs. I will put these in the context of the macroeconomic policy response during the same period and conclude by reflecting on systemic reforms which Europe needs to strengthen its economic recovery and to at last make progress towards the employment and social inclusion targets of the Europe 2020 Strategy.