Restarting Growth in Europe

Abstract

European GDP is still below its pre-crisis level. The unemployment rate is higher than before the crisis and higher than in the US. Europe has a current account surplus, lower debt relative to GDP than the US, lower differences between high and low incomes, less poverty and better vocational training and ecological performance. But absence of growth endangers also social and ecological ambitions. Four preconditions for restarting growth are emphasised: better governance, a new strategy for the South, a systemic industrial policy and to make use of the high growth of the neighbour countries. Europe offers- and should go along this path with more determination- an attractive socio economic model emphasizing beyond-GDP goals not prioritized in the US and Asian model. We redefine competitiveness as “ability of a country to deliver Beyond GDP-goals”, thus downgrading the current pre occupation of economic policy with cost cutting and show that Europe’s competitiveness relative to the US is much better if social and ecological goals are included in the evaluation instead of focussing on labour and energy costs only.