16 January 2020

ECB's Lagarde: Frankfurt and Europe in a new decade

ECB President Christine Lagarde praised the benefits that European integration has brought about for Europeans internally, and how much more the EU can achieve externally if Europeans cooperate in the right way.

[...]At home, we hear voices questioning the value of European integration and the need for us to go on working together as a Union to be stable and prosperous.

Globally, we face a world where the rules-based order is weakening, old and new powers are rising, and climate change is becoming the pre-eminent challenge of our age.

In this uncertain environment, it would be easy for us to cling to the status quo, to hope these challenges will simply pass with time. But I fear this won’t be the case.

So, I would like instead for us to ask – proactively and positively – what kind of Europe we want to be in this new world. And to my mind, the answer has two parts.

First, recognising how much European integration already offers us internally; and second, acknowledging how much more we can achieve externally if we cooperate in the right way.

The value of our internal integration is not just measured in euro. Europe is a symbol of who we are and who we aspire to be.

The EU and the euro embody our common commitment to peace, to openness, to democracy, to justice. And they shape how we see ourselves: more than two-thirds of citizens now cite their European identity alongside their national identity.

At the same time, integrating through our Single Market does bring us real economic benefits.

According to one estimate, the EU’s GDP per capita would be as much as one-fifth lower today if no integration had taken place since the war.[2]And it is our common institutions in the EU that secure those gains – as events on the global stage currently demonstrate.

Global trade tensions are arising, essentially, because of perceptions of unfairness – be it over state support for industries, undercutting of labour standards or currency manipulation.

But none of those things are possible within Europe – by design.

That’s because we have built a common court to which individuals and governments can appeal if they are treated unfairly. We have common rules to prevent a race to the bottom on standards. And we have a common currency that prevents competitive devaluations.

The EU and the euro are not incidental to our prosperity, in other words. They are the vital ingredients that protect our Single Market and thereby safeguard our way of life.

And what is true internally can also be true externally.

It’s clear that cooperating within Europe gives us a stronger voice in negotiations with other countries, as we saw for example during the Paris climate talks a few years ago.

And, in a world where multilateralism is under threat, working together as a Union becomes even more important – it is the only way for middle-sized countries to stand up to large regional players and defend our common interests, including by setting standards to protect our privacy and our data, for example.

Collectively, the EU accounts for 22% of global GDP[3], second only to the United States, and EU trade makes up 17% of world trade, compared with around 14% for the United States.

It’s plain to see that this gives us more weight on the world stage than any country acting alone, if only we can together leverage our collective market force.

So we have a huge potential, as Europeans, to build on this external side of our community.

This does not mean compromising our European values of inclusiveness and international cooperation. It means being open to the world but confident in ourselves; being friendly to all, but ready to protect our interests when necessary.[...]

Full speech

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