The EU in crisis: what should really be done?
Hans Martens
Chief Executive
European Policy Centre
We have a Western World Growth crises GDP Growth %
6
5
4
3
2
1
0
-1
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
-2
-3
-4
-5
Euro
Linear (Euro)
OECD Economic Outlook 89
US
Linear (US)
OECD
Linear (OECD)
We have a Western World Growth crises GDP Growth %
6
5
4
3
2
1
0
-1
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
-2
-3
-4
-5
Euro
Linear (Euro)
OECD Economic Outlook 89
US
Linear (US)
OECD
Linear (OECD)
A currency in crises?
A currency in crises?
Are we addressing the right crises?
Public budgets
% af GDP
0
7
8
9
10
11
-2
-4
-6
-8
-10
-12
-14
US
OECD Economic Outlook No 91
Euro
UK
Jap
12
Public debt
% af GDP
220
200
180
160
140
120
100
80
60
40
7
8
9
US
OECD Economic Outlook No 91
Euro
10
UK
11
Jap
12
US and EU current account 1995 – 2012 - % of GDP
2
Euro
1
12
20
11
20
10
20
09
20
08
20
07
20
06
20
05
20
04
20
03
20
02
20
01
20
00
20
99
19
98
19
07
10
96
19
19
-1
95
0
-2
-3
US
-4
-5
-6
-7
Source: OECD Economic Outlook no. 91
Public budget deficits 2012
% af GDP
0
-1
Ita
Euro
-2
-3
-4
-5
-6
-7
-8
-9
OECD Economic Outlook No 91
Por
Spa
Gre
UK
US
Ire
Public debt 2012
% af GDP
180
160
140
120
100
80
60
40
20
0
Spa
Euro
OECD Economic Outlook No 91
UK
US
Ire
Ita
Por
Gre
Different countries – different problems
North – South divide, especially on economic growth
Country
Deficit
Debt
Politics
Growth
Jobs
Other
Greece
Bad
Bad
Bad
Bad
Very bad
Italy
Small
Large, but
stable
Was bad,
better now
Bad
Bad
Most debt national
Spain
Large
Medium
Good
Bad
Very bad
Public finances
fine. Private debt
bad
Ireland
Bad
Bad
Good
Medium
Bad
Overexposure to
banks
Portugal
Medium
Medium
Good
Bad
Bad
What the markets wanted
QE
A delicate balance
Austerity
Growth and Jobs
Unemployment 2012
% of Labour Force
25
20
15
10
5
0
Ger
Swe
Den
OECD Economic Outlook No 91
UK
Ita
Ire
Por
Gre
Spa
Political and social pressure
Time to change focus
We must now focus on Growth and Jobs
No power in national budgets. Europe must show its value now
Growth bazooka, including deepening of Single Market (green
and digital), Project Bonds, EIB capital, release Structural
Funds, free trade agreements
If we don’t succeed, social tensions could impact very badly on
politics
More bad news ahead for the welfare state
Demographics means a lot more to
enjoy the benefits – and a lot fewer
to pay into systems
Pensions
When pensions were
introduced in Europe:
Now:
Second careers
Child/School:
Work: 15- 70
Pension:
0 – 15
70 – 74
Working life in % of
whole life: 74
Child/school:
Work:
Pension:
0 – 25
25- 62
62–85
Working life in % of
whole life: 43
Does it take jobs
away from the
young?
Social means different things in Europe
Protecting the individual in society
or
Protecting the jobs
Flexicurity is difficult to explain and accept in Southern Europe
Wages or productivity
Is the SAS model the only one?
Can we increase productivity – in private and public sectors?
Will we become more protectionist?
Will anybody benefit from more protectionism?