In parallel, economic guidance should provide an effective mechanism at the EU level to detect and correct the evolution of imbalances that may derail economies.
Fiscal and economic guidance to safeguard stability should be accompanied by policies to boost growth and competitiveness. Common policies for education, labour market mobility, transport, and energy are obvious candidates to stimulate growth through investments in Europe’s physical and intellectual infrastructure.
Another political step is the banking union, a necessary institutional corollary to the monetary union that can make a long-term contribution to the stability of the euro region. However, we cannot get a banking union for nothing. Even with a banking union in which the ECB takes on the role of banking regulator, there is no avoiding sensitive political issues involving the extent to which sovereignty is to be relinquished the expansion of transfer mechanisms. Finally, within the next ten years, the EU should strive to establish a sovereign debt restructuring mechanism offering liquidity support to governments when appropriate, but also guaranteeing an orderly process in the case of default. The unlikely, but not impossible, situation must be managed efficiently – in order to avoid a repetition of today’s situation, where seemingly endless rescue operations are needed to prevent any kind of disorderly default.
The combination of all these steps should offer the best chances of success to stop the dwindling of the importance of Europe as an economic and political force in the world during recent years. Otherwise, this process is set to continue quickly in a world with newly emerging powers and changing demographics. Asia’s population is set to grow by a further 1.7 billion over the next four decades, and Africa will have a population of 2 billion. Europe on the other hand will see its population fall by 20 million by 2050.
No one single country in Europe will be in a position to exert major influence on the foundations and the values of tomorrow’s world economic and political order. Even Germany, with the largest population of all countries in Europe, accounts for only 1.1 percent of the world’s population. How successful would any European country be in asserting its views for example on environmental issues, social values or on free market policies for that matter in the international arena if it does not team up with its European partners?
Therefore, European integration and European unity must be elevated to a new level. The ambition of policymakers should be to eliminate the flaws in the present institutional framework of the euro, to foster integration and unity among the EMU and the EU members. In short: to unite and not to divide the old continent.
In the world we live in, European unity is the way forward if we want to preserve our influence on the international world order, safeguarding our living standards for the coming generations.