Independent Annual Growth Survey 2017Overcoming the slowed-down economic recovery in the European Union
Last week, the EU Commission presented the Annual Growth Survey 2017 within the framework of the European Semester. In it, the EU Commission sets out next year's priorities in the areas of economic and social policy for the European Union and her Member States. The present Annual Growth Survey recognises that the economy has to be revived and that the social dimension of the Single Market has to be strengthened. However, this is taking place under the three-pillar strategy “Investments – Structural Reforms – Fiscal Responsibility”.
Parallel to the Annual Growth Survey of the Commission, an annual “Independent Annual Growth Survey” by the Think-tank “Progressive Economy” is introduced with the active cooperation of the AK. This survey is highly relevant from employees’ point of view as it represents a counter balance to the neoliberal position of the EU Commission.
Almost 9 years after the outbreak of the economic and financial crisis, the European Union is still on a very slow road to recovery - in spite of favourable developments, such as low crude oil prices, low interest rates, low effective exchange rates for the Euro or unconventional monetary policy by the European Central Bank. This results in unemployment and inequality manifesting themselves as social crises.
A systemic change of strategy is needed!
What is required to boost this timid growth and to combat multifaceted insecurity, is a systemic policy-mix, which does not only offers economic solutions, but is based on four basic pillars: active demand management, reinforce the European Union by combating unequal distribution and current account imbalances, increase financial stability and address the environmental question.
In detail, this means among other that an increase in fiscal space is required for active demand management. Countries must once again invest more and actively – but in a clever and efficient way. Based on a Golden Rule for public investments one can expect a clear positive effect for economic growth. However, active demand management also requires a wage policy, which strengthens domestic demand and counteracts deflationary tendencies.
Within the European Union, an improved coordinated development of wages, for example through minimum wage standards, involvement of trade unions or fiscal tools, may counteract the internal disproportions of the current accounts of the Member States. The European Union must clearly counter the rising divergence of the Member States in order not to lose her legitimacy.
In addition to these macroeconomic and social challenges, a strengthening of the financial market stability (keyword Banking Union) and a brave approach to environmental problems is required. Based on adequate framework conditions, private investments would be able to make their contribution to climate change, for example by setting up o (or many) carbon price(s).