"Europe must plan a reform, not a pact", Financial Times, 3rd March 2011
Article published in Financial Times, 3rd March 2011.
The next two weeks will reveal whether European Union leaders have the stomach to address Europe’s underlying economic problems. Some member states remain outside the eurozone, but even they are not insulated against the risks of unco-ordinated growth strategies. The last time EU leaders met, in early February, a Franco-German proposal for a competitiveness pact was thrust upon them. It received short shrift from many around the table, as much for the indelicate manner of its presentation as for its content. Now an alternative is needed.
The French and German governments were right to note that Europe needs more effective economic governance. It just requires leaders to agree on those areas to include and the means to achieve it. And therein lies the rub. There are a variety of economic models across the EU from Scandinavia to the Mediterranean, and including both low tax, high consumption economies and high tax, low consumption economies. Finding a formula that works for all is no easy matter. But that task should be the preserve of the European Commission, not a cabal of two or three countries imposing a model on the rest.