Past Event

For a stronger and more integrated Europe

This event will feature the presentation of the Economic Survey of the European Union 2018 and Economic Survey of the Euro Area 2018.

Date: June 19, 2018, 12:30 pm Topic: European Macroeconomics & Governance

audio & video recordings

summary

On 19 June we were pleased to host OECD Secretary-General Ángel Gurría who presented the Economic Survey of the European Union 2018 and Economic Survey of the Euro Area 2018.

The Surveys, prepared every two years by the OECD Economics Department, assess the state of the European Union and Euro Area economies as well as the policies and reforms that can help ensure strong, sustainable and inclusive growth as the European project moves forward.

The European Union Survey looks more specifically at how to ensure a greater integration of European economies, notably through more efficient cohesion policies, a reformed EU budget and completing the single market.

The Euro Area Survey discusses reforms to buttress the Monetary Union by completing the banking union, establishing a common fiscal capacity in the form of an unemployment reinsurance scheme and revisiting fiscal rules.

Mr Gurría was joined by Pierre Beynet, head of the OECD Economics Department division responsible for the EU and Euro Area, OECD senior economist Aida Caldera-Sanchez. The seminar was moderated by Bruegel senior fellow Zsolt Darvas.

 

“More Europe, more Europe, more Europe”

After years of crisis, growth in the EU has picked up momentum. While the improved economic conditions are welcomed news, they are still some risks for economic growth: Trade tensions have dented business confidence and created uncertainty which delays investment and consumption decisions, Europe is ageing rapidly and productivity growth is weak.

The policy toolkit to complete the monetary union involves a fiscal backstop for the single resolution fund, reinforcing the guarantee of bank deposits and breaking the negative feedback loop between banks and states through the creation of a “safe asset”. Briefly put: better supervision, regulation and integration.
Growth in the medium to long-term should rely on investment on education, innovation, regulation, competition, flexibility in the labour and product markets and R&D. The underdevelopment of capital markets is also an issue to be solved. The persistence of zombie companies and the lack of new companies leads to misallocation of resources and lack of job creation. Above all, going forward growth must be inclusive.
The OECD also supports a broader and stronger EU budget. It was put forward that there is room to reallocate common agricultural policy funds to digital policy and structural changes, with an emphasis on the lagging regions.

A common European unemployment reinsurance system

One of the proposals of the OECD Surveys is the common European unemployment reinsurance system. This instrument is designed to respond to big shocks (e.g. if the unemployment is above a long-term average and increasing above a given threshold) with a 1% GDP transfer. These transfers can provide a cushion against shocks and smoothen economic fluctuations. As the OECD shows, not only southern European countries, but all countries would have benefitted from such a scheme during the 2002-2016 period, although different countries would use the scheme in different moments in time. The scheme is also set to return progressively to equilibrium. As the scheme would be financed by borrowing and later paid back by countries, it would not imply any cross-country transfers.

Rethinking cohesion policy

Europe is now growing… asymmetrically. The crisis not only reduced convergence across countries but also among regions. While regional policy absorbs a sizeable share of the budget, results of studies evaluating its effectiveness are mixed. It was proposed that cohesion policy is rethought in a time when going forward there will be less money in light of other priorities such as migration or defence policy.
Regions lagging behind should receive most of the funding. Appropriate targeting of spending is also needed – cohesion policy funding is dispersed across objectives. Though important, some of them, such as climate change, should be managed with another tool and free up funds for cohesion priority areas such as investment in education and innovation. Another issue that was identified was the pace of spending – often countries spend funds only when close to the end of the programs. A suggested solution was to increase the co-financing share of countries so as to better financial planning and spending. A final remark was that more analysis is needed on how funds are spent.

Event Materials

2018 OECD Economic Surveys of the Euro Area and the European Union

 

Schedule

Jun 19, 2018

12:30-13:00

Check-in and lunch

13:00-13:20

Presentation

Angel Gurría, Secretary-General, OECD

13:20-14:00

Discussion

Chair: Zsolt Darvas, Senior Fellow

Pierre Beynet, Head of division, OECD Economics Department

Aida Caldera-Sanchez, Senior economist , OECD Economics Department

Angel Gurría, Secretary-General, OECD

14:00-14:30

Q&A

14:30

End

Speakers

Angel Gurría

Secretary-General, OECD

Zsolt Darvas

Senior Fellow

Pierre Beynet

Head of division, OECD Economics Department

Aida Caldera-Sanchez

Senior economist , OECD Economics Department

Location & Contact

Bruegel, Rue de la Charité 33, 1210 Brussels

Matilda Sevon

matilda.sevon@bruegel.org

Read article More on this topic More by this author

Opinion

Can Eurozone Reform Help Contain Trump?

The Trump administration knows that a key source of US economic leverage is the dollar’s role as the world’s dominant reserve currency. Countering America’s disproportionate power to destabilize the global economy thus requires reducing the share of international trade conducted in dollars.

By: Jochen Andritzky Topic: Global Economics & Governance Date: October 17, 2018
Read article More on this topic More by this author

Blog Post

The international use of the euro: What can we learn from past examples of currency internationalisation?

The recent State of the Union speech by Jean-Claude Juncker sparked a discussion about the potential wider use of the euro on the international stage. Historically, it is not the first debate of this kind. Emmanuel Mourlon-Druol analyses four previous cases of debates on international currencies to reveal the different scenarios associated with their greater use, as well as the need to have a clear objective for a currency’s internationalisation.

By: Emmanuel Mourlon-Druol Topic: European Macroeconomics & Governance Date: October 15, 2018
Read article More on this topic More by this author

Podcast

Podcast

Director’s Cut: How does Italy’s budget fit with EU fiscal rules?

In this Director’s Cut of ‘The Sound of Economics’, Guntram Wolff welcomes Bruegel research fellow Grégory Claeys to assess how the new Italian budget proposals measure up against the existing EU fiscal rules.

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: October 9, 2018
Read article More on this topic

Blog Post

Italy’s new fiscal plans: the options of the European Commission

The Italian government has announced an increase of its deficit for 2019, breaking the commitment from the previous government to decrease it to 0.8% next year. This blog post explores the options for the European Commission and the procedures prescribed by the European fiscal framework in this case.

By: Grégory Claeys and Antoine Mathieu Collin Topic: European Macroeconomics & Governance Date: October 8, 2018
Read article More on this topic More by this author

Podcast

Podcast

Director’s Cut: The Italian government budget proposal for 2019

Guntram Wolff welcomes Bruegel affiliate fellow Silvia Merler to evaluate the Italian government’s planned budget for 2019, in this Director’s Cut of ‘The Sound of Economics’

By: The Sound of Economics Topic: European Macroeconomics & Governance Date: September 28, 2018
Read article Download PDF

Policy Contribution

European Parliament

Excess liquidity and bank lending risks in the euro area

In this Policy Contribution prepared for the European Parliament’s Committee on Economic and Monetary Affairs (ECON) as an input to the Monetary Dialogue, the authors clarify what excess liquidity is and argue that it is not a good indicator of whether banks’ have more incentives in risk-taking and look at indicators that might signal that bank lending in the euro area creates undue risks.

By: Zsolt Darvas and David Pichler Topic: European Macroeconomics & Governance, European Parliament, Testimonies Date: September 26, 2018
Read article More on this topic More by this author

Blog Post

Big Macs in big countries: an update on euro area adjustment

Have prices moved in the direction of correcting real exchange rate misalignments everywhere in the euro area in recent years? Not between the largest euro-area economies, i.e. France, Germany and Italy, says evidence from the Big Mac index. However, latest trends may be working in the right direction in these countries too.

By: Konstantinos Efstathiou Topic: Global Economics & Governance Date: September 20, 2018
Read article More on this topic More by this author

Blog Post

Reforming the EU fiscal framework

Researchers have often highlighted the problematic nature of the currently very complex EU fiscal framework. Here we review economists’ views on how it should be changed.

By: Silvia Merler Topic: European Macroeconomics & Governance Date: September 17, 2018
Read article More on this topic

Blog Post

The economic case for an expenditure rule in Europe

Proposals for reforming the euro area back on the agenda. An overhaul of the European fiscal rules should be on high on this agenda, because the current fiscal framework has not worked well. This column proposes substituting the numerous and complex present rules with a new, simple rule focused on limiting annual growth rate of expenditures.

By: Zsolt Darvas, Philippe Martin and Xavier Ragot Topic: European Macroeconomics & Governance Date: September 13, 2018
Read about event More on this topic

Past Event

Past Event

Reforming Europe's fiscal framework

This event will discuss reforming Europe's fiscal framework in order to make it less complex and more effective.

Speakers: Zsolt Darvas, Lars Feld, Philippe Martin, Lucio Pench and Beatrice Pierluigi Topic: European Macroeconomics & Governance Location: Bruegel, Rue de la Charité 33, 1210 Brussels Date: September 12, 2018
Read article More on this topic More by this author

Opinion

Should central European EU members join the euro zone?

Eurozone membership (or the use of a fixed exchange rate) was not a factor determining economic success in Central Europe. There were both good and bad macroeconomic performances in both the flexible and the fixed exchange rate regimes of Central European countries. The implication is that Central European “outs” could be economically successful both with and without the euro, yet the EU is not only about economic benefits.

By: Zsolt Darvas Topic: European Macroeconomics & Governance Date: September 11, 2018
Read article Download PDF More on this topic More by this author

Policy Contribution

High public debt in euro-area countries: comparing Belgium and Italy

This Policy Contribution looks at the evolution of public debt in Belgium and Italy since 1990 and uses the debt dynamics equation to explain the contrasting evolution in the two countries in the run-up to the introduction of the euro, during the early years of the euro and since the beginning of the crisis, arguing that the euro could have been used also by Italy to undertake sufficiently large fiscal adjustment.

By: André Sapir Topic: European Macroeconomics & Governance Date: September 6, 2018
Load more posts