The single most important challenge in developing the monetary union, the eurozone and the banking union is stimulating growth and competitiveness while implementing and living up to the decisions we have already taken.
The current economic recovery is fragile, based on two temporary factors: first, extreme monetary policies such as negative interest rates and quantitative easing, and second, the peak of the business cycle. Structural reforms for a better climate for entrepreneurship and innovation and new budgetary policies are largely absent from the agenda.
Such reforms need to take place if we are to be successful as a global economy and if we are to be able to live by our own rules for stable and dynamic economies. We need stability in public finances and macroeconomic balances, but we also need dynamism in investments, new businesses and startups as well as new products, services and industries. It is achievements here that will define the development of the European economy.
The changes necessary will not come from new institutions telling us what we need to do, we already know. The idea that a European finance minister would change the European economy is an illusion.
Rainy-day funds at EU level will not change anything. Member states with poor economic policies always tend to be the rainy ones, in contrast with the reforming member states where the sun gives stability, growth and employment.
The belief that various European taxes would provide greater investments and stability ignores the fact that Europe already suffers from the highest tax burdens in the world, on average more than 10 per cent higher than our closest competitors.
We need lower taxes and to create an environment that promotes private investment contributing to growth, with profitable companies competing successfully in the global economy.
I am a Swede in favour of the euro, and I find it striking that my country – as a member of the economic and monetary union but not of the single currency – meets the membership criteria. This is in contrast to most euro countries.
This is because, together with a few others, Sweden takes these rules seriously, with new budget policies and processes aimed at securing the stability of public finances. We have also carried out structural reforms to create a better functioning economy.
The same goes for the member states that meet the criteria or that are on their way to doing so. Real recovery requires real reforms. Hands-on work is more important than glorious visions about the EU institutions and how to centralise power to them.
This how to do it: First, the growth and stability pact must be respected in the member states, both in meetings but also in reality. Financial stability is the most crucial prerequisite for growth. Those that are in breach of the rules should be sanctioned. This is the only way forward if we are to be serious about the euro and development of the eurozone.
Second, don’t introduce new rules in order to compensate for those that are already being ignored. The budgetary capacity to meet the changes in our economies lies, and will continue to lie, with in the member states. We don’t need big funds for transfers to member states that don’t meet the rules and that don’t reform. Instead of conserving deficits by subsidies, they must be tackled with lower spending and higher incomes.
Third, do not believe that new institutions will replace political courage and commitment. A Commission that is soft on structural reforms and the stability pact will not deliver better policies just because it has greater powers.
The main challenge lies in the member states; reforms can’t be ordered from the outside, particularly from Brussels. The eurozone needs to implement all new banking legislation and make sure everyone abides by the rules. Governments and banks in crisis need a back-stop, which should be provided by the European stability mechanism.
Fourth, we need to deepen the internal market, make sure that all parts of services are covered, take a lead in digitalisation and 5G, create a capital markets union and open energy markets.
Fifth, the European economy and the euro will become stronger by making the EU a centre for global trade and for the new knowledge society. We should advocate free and open trade. When the US gets smaller we need to get bigger, by saying no to protectionism, by signing new trade agreements and by upholding the international rule of law.
Finally, we have achieved much more than we give ourselves credit for; a united Europe, a common currency and the biggest internal market in the world. That is the main ground for the monetary union and the euro. It is by using all the opportunities that are provided that we can strengthen the economies of the eurozone and the EU.