Politico’s Article Title Rewrite: The Crucial Battle of Europe’s Economic Models

Simone Tagliapietra and Jeromin Zettermeyer, both representing Brussels-based think tank Bruegel, discuss the changing economic policy debates ahead of the European elections. They note that while previous elections focused on the need for an increasingly closer coalition among members, this cycle is different. The focus is now on the growing Russian aggression, the authoritarian China, and the threat of former President Donald Trump returning to the White House. Furthermore, economic nationalism is a new problem, and climate change is increasingly affecting the EU.

The stakeholders in the EU are unsure how to respond to these challenges. They face a lack of consensus on what economic security means, the policies that best promote competitiveness, and what form state intervention should take. The EU faces various dilemmas, such as whether the US and China pose symmetrical economic threats and if the single market rules should be prioritized over economic security. The EU must make essential decisions on how to jump on the bandwagon of ignoring World Trade Organization rules, state intervention, and diversification.

The EU must also balance various conflicting goals regarding China, such as protecting European companies, security issues, trade, and climate change. The EU must cooperate with China, mainly on climate change, while continuing to grow their economy. Their commitment to decarbonisation may be undermined by intellectual and political turmoil, but President Ursula von der Leyen’s leadership has launched a Just Transition Fund and other initiatives to tackle this issue.

The authors propose two critical points to consider in finding policy solutions. Firstly, tensions, such as decarbonisation, competitiveness, and economic security, should be reconciled while recognizing there will be trade-offs. Secondly, new policy paradigms, from regulation to active industrial policies, should not substitute for overcoming the EU’s longstanding weaknesses. The EU’s fragmented nature, as a collective of sovereign states, constrains a true single market. Therefore, the authors argue that the EU must devise policies that minimize unintended consequences while acting immediately to tackle the present challenges they face.

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