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Stimulus packages, artificially low interest rates, quantitative easing, and calls for flexibility regarding the implementation of the stability pact and its rules. These are some of the methods recently used to attempt to jumpstart the struggling European economy, or at least overcome the problems. They have all failed. This is because none of them actually address the underlying problem: a lack of competitiveness.
For a long time now, there has been a fierce debate between those who argue for more government spending, allowing for bigger deficits and increased lending, and those who defend budget consolidation and the respect for the stability pact. True, there have been real economic problems in many of the member states of the European Union and many Europeans have suffered greatly. Increased spending and increased debt burden have not helped, but have worsened the problems: lost credibility and lack of investment. One should keep in mind that the average government gross debt of all EU countries rose from 44.3% of GDP in 2007 to 72% in 2013. This increase has undermined welfare, social stability, employment and growth. [...]
More importantly, neither this austerity nor ‘spenderity’ will work without ‘reformity’. Absent reforms for a better functioning economy, Europe will not escape its troubles. [...]
It’s all very simple. Instead of trying to spend us out of the present problems, from day to day and year by year, we need to do what we know we need to do: structural reforms in each member state, characterised by freedom of establishment, freedom of contracts and agreements, competition and where we have public services, public financing for the individuals to use them, not subsidies to the companies.
In order to achieve that, we do not need institutional change at EU level. In the Treaty of Rome, we all subscribed to an open economy, market reforms, competition over the borders, limits to state aid, and competition laws allowing challengers to enter the market. [...]
Instead of deficits and public plans subsidising investments, we need to create the demand for investment. That’s why we need an era of reforms and liberalisation, in order to defend and develop the economic freedom that is the precondition for our prosperity. We need economic strength to be able to stand up for European freedom in a world of new challenges and threats.
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There is a need for an agenda of reforms aiming to make the European Union one single internal market characterised by a high level of economic freedom, room for new ideas, deregulation paving the way for Europe to become the global leader for start-ups and for small companies, while also providing our big companies with the best opportunities to operate globally with their centres in Europe. [...]