Speech: How does Europe win the global race?

European Commission

[Check Against Delivery]

Michel BARNIER

Member of the European Commission, responsible for Internal Market and Services

How does Europe win the global race?

European Business Summit 2014

Brussels, 15 May 2014

Thank you Sean.

And thanks to Business Europe and the Federation of Enterprises in Belgium for organising this conference.

You asked us how Europe can win the global race.

But for me, what is at stake is not only about winning a race.

It is also about taking the right decisions for Europe.

But first, to win the race, you need to be in the race!

And there is one thing I am sure of: if Europeans are not together in a united yet not uniform Europe, we will simply not be in that race.

Let me show you my favourite table. It was produced by the UK government 3 years ago. It shows that every 10 years, a european member state gets out of the G8.

By 2050, no individual European country is part of the G8. We are not in the world league anymore, we are not part of the race.

But if we are together, then we are in the race! And if we take the right decision, we can win it.

To win, we need to consolidate growth. Recent figures are encouraging but we need to be vigilant: 1,6% growth for the EU this year, 2% next year.

We need to make sure that young people have a job to go to and above all a future to believe in.

We need to consolidate our social market economy.

The fact is that we have no choice if we still want to sit at the table with those who decide in 10 or 20 years' time.

The European Union is not just a free trade area.

But neither is it a federal state in which Member States have to abandon their traditions and their culture.

It is a unique project.

A family of over 500 million people. 22 million SMEs.

We are respected around the world for our values.

Of democracy.

Rule of law.

But Europe is more than that.

The Union has ensured peace and stability in its Member States for more than 60 years.

Looking at the recent developments on our Eastern borders, I think we can all agree this achievement cannot be taken for granted.

But let there be no room for complacency.

I am the first one to recognise that certain things in the EU need to change.

Populist, euro-sceptic parties are on the rise. Not only in my country, but across Europe.

Recent polls suggest these parties could gain as many as a third of votes in the upcoming elections to the European Parliament.

But that does not have to be the case. We must not give up!

We must explain what Europe can and cannot do. How it needs to change.

Europe has a number of good tools. Some have been created during the last 5 years, in particular in my area of responsibility, tools for financial stability.

But even with the best tools, there is one thing you will never find in a treaty or a directive: and this is political will!

Let me mention, telegraphically, six issues I believe Europe should focus on decisively, with political will, if it wants to make both the right decisions for itself and strengthen its position in the world:

First of all - we need to find the right balance between austerity and growth: It is not a choice between the two. It never has been, and it should never be. The right fiscal consolidation, at the right speed, need to accompany structural reforms.

Second - make the EU industrial renaissance a reality: In less than 15 years, the share of industry in the EU GDP has fallen from 20% to 15,1%. This decline affects the economy as a whole since the manufacturing sector accounts for 80% of exports, research and innovation.

We need to do more to keep production in Europe and embrace globalisation thanks to a solid, EU-home base. Make sure that our IP infrastructure is fit for purpose. In this context, I call on all Member States concerned to implement the unitary patent as quickly as possible. The right protection is not protectionism. It's investment! Investment in research and innovation, investment in infrastructure, investment in human capital...

Third - we need to face the energy challenge. For this to happen, we must reduce our dependence on countries outside the EU. The EU only produces 46% of its energy needs. And 5 Member States account for 2/3 of the total EU production!

We need to reactivate our production ability by setting common targets to reduce the dependence but leave to Member States the means to achieve that objective. The national energy mix and which energy sources to use is and remains a national choice.

This should go hand in hand with creating the right incentives for industry to reduce pollution and invest in renewable and non-conventional energy sources. An idea I have had for a long time is a European tax based on the carbon content of products and services.

Four - complete the Digital Single Market: The digital sector is growing 7 times faster than the rest of the European economy!

It is often suggested that the digital economy destroys traditional jobs. But it has also created numerous new job opportunities! The sector of mobile applications is expected to represent 3 million jobs by 2018!

Europe has a huge potential as regards technology and knowhow. We need to use these assets in a more targeted way, making sure that online provision of services works as efficiently as in the offline world and that interaction between both worlds are smooth.

Five - be a global player: Looking at the EU's eastern borders, I don't think I need to explain what I mean in great detail.

We need to be more than the sum of our parts as trade partners, negotiators, mediators.

I referred to it already - it is only by joining forces and standing together in this changing world that we will manage to make a difference. In that context, a common defence strategy - pooling our resources - would be an important tool.

And my sixth and final point: the social dimension: All EU countries face similar challenges in terms of ageing populations and constrained public finances. National choices must be respected but we can learn from each other's experience.

By way of example: Look at the low youth unemployment in Germany or effective reintegration policies for workers in Denmark!

One idea I have is to set up a European scoreboard on policies relating to social matters, mobility and solidarity. And I think we should dare to discuss issues like a common EU unemployment scheme, a common EU employment contract and a so-called "29th" regime for pension products.

There will be no sustainable growth without social cohesion.

To conclude, let me quote Jean Monnet: When asked whether he was an optimist or a pessimist, he answered "I am determined".

Ladies and Gentlemen, it is time for Europeans to show a new determination.

And I believe that if we face up to these challenges - together - we will be making the right decisions for Europe, for now and future generations.

Thank you.