As stated in our previous policy proposal, the best way for Europe to gain strength and avoid recession is a stimulus package to create growth and jobs to make Europe’s next decade a prosperous one.
This growth needs to come from a number of places. There are still huge gains to be made from completing the single markets in services, digital, and energy, and the Commission is making steps towards doing this, but these need to be sped up. Regulation needs to be further simplified and unified across Europe so that the barriers to businesses exploiting the single market are lowered. On top of this Europe look to strengthen its presence at the WTO to increase world trade, allowing Europe’s exporters greater access to foreign markets.
These are not sufficiently significant changes though. In a mature European economy the only way to create real, solid, long lasting growth is to encourage innovation. Indeed, technological advances allow incomparable increases in wealth and living standards.
Europe must ensure that policies are in place now to encourage innovation and build on our strengths in this area. R&D spend needs to increase as a percentage of GDP, and our research base must be increasingly supported by both public and private money. We need a better venture capital culture, so that innovative companies can get the funding to flourish. We need to improve the infrastructure that innovation relies on, such as broadband networks and Europe’s higher education system.
Innovation is not enough. For Europe’s economy to be truly viable in the long term Europe needs to manage its resources in a sustainable way. In order for this to happen Europe needs to internalise the externalities in our economy by attaching the right price to them. We already have the EU Emissions Trading Scheme, but this should be strengthened significantly and replicated to cover other externalities.
Over the next few articles we will develop these ideas with articles on all aspects of European growth.
A stronger Europe needs sustainable growth, and a stronger Europe needs innovation.
What do you think?