Ineffective economic policies

Subject: Ineffective economic policies

The International Monetary Fund has calculated that the euro area’s economy has grown by only 6 % over the past 15 years, while the US economy has recorded 82 % growth. If per capita economic output in the euro area continues to follow that trend, Europe’s population faces significant impoverishment, the effects of which are, for that matter, already visible. By 2030, according to a study, the ratio of the EU’s economic output per capita to that of the US would be the same as that of Ecuador’s, a third-world country, to Japan’s.

The European Community’s key objectives were peace and prosperity.

Both are now in tatters. European cities are plagued with criminal violence as regularly as clockwork and public transport is unsafe: a war of civilisation is taking place at the heart of the EU.

Europe’s middle classes are being put through the wringer of the Commission’s globalist wishful thinking. It is clear that this EU has failed in its main objectives.

1. What measures does the Commission intend to take to revive per capita economic output in the euro area?

2. Does the Commission realise that in this legislature, too, it is pursuing objectives that will further impoverish the population of the euro area?

Submitted:23.1.2024

Answer given by Mr Gentiloni on behalf of the European Commission

(28 May 2024)

Prosperity is a central objective for the EU. In recent years, thanks to NextGenerationEU, the European instrument for temporary Support to mitigate Unemployment Risks in an Emergency (SURE), the general escape clause of the Stability and Growth Pact, and the State Aid Temporary framework, the EU showed resilience in the face of a sequence of unprecedented shocks caused by COVID-19 and the war in Ukraine.

Nonetheless, while the number of jobs has reached historical records, productivity has steadily decelerated in the EU, as well as other advanced economies. Supporting competitiveness and boosting productivity is therefore an imperative for the EU, and comparison with peers is an important yardstick. (1)

Persistently high and volatile energy prices would hamper the competitiveness of European companies. Through REPowerEU, the EU aims to reduce its dependence on Russian fossil fuels and fast forward the green transition. (2)

In the European Semester for economic policy coordination, the Commission and the Council have recommended action to foster sustainable competitiveness, supporting vulnerable households and firms and preserving public investment for the green and digital transitions.

The EU also aims to strengthen the EU industry, for example through the Net-Zero Industry Act and the Strategic Technologies for Europe Platform.

Moreover, a further deepening of the Single Market, including in the areas of finance and energy, holds important additional growth potential.

1 ∙ ⸱ However, the attention of the Honourable Member is raised to the fact that the figures quoted in the question are quite off the mark, and the disparity between

economic growth in the EU and the United States (US) is much smaller than indicated in the question, and even smaller when the comparison considers demographic developments or hours worked. When Purchasing Power Parity is applied, the gap between European and US gross domestic product (GDP) per capita growth between 2000 and 2023 is reduced to a mere 5.9 percentage points. Cf Licchetta, M. G. Mattozzi, R. Raciborski and R. Willis, ‘Economic Adjustment in the Euro Area & the United States during the COVID-19 Crisis’, European Economy-Discussion Paper 160, (available here: https://economy- finance.ec.europa.eu/publications/economic-adjustment-euro-area-and-united-states-during-covid-19-crisis_en), which includes in particular a discussion on the long-term drivers of growth in the US and in the EU. 2 ∙ ⸱

For a discussion on competitiveness issues, including the policy challenges related to high energy prices, the Honourable Member may wish to refer to ‘2024 Euro Area Report,’ European Economy-Institutional Paper 259, available here: https://economy-finance.ec.europa.eu/publications/2024-euro-area-report_en