From top: The EU’s White Paper on the Future of Europe; Tony Groves
Prediction is a mugs game. Many people much smarter than I have erred badly in the game of throwing predictions about. Some, while not quite masters, are certainly more adept in the art of reading the economic tarot cards.
I remember being at a banker “breakfast briefing” a few years before the Global Financial Crisis where a hipster economist named David McWilliams laid out his prediction of the economic crash to come in our not too distant future. I was convinced by his reasoning until a colleague put up his hand to ask a question.
“David,” he said, “I’ve been to a series of these briefings for a number of years, and you always give the same warning”.
“Is there a question in there?” replied David.
“Ah, it’s kind of like saying in the middle of a heatwave that it’s gonna rain tomorrow. When it does eventually rain you can say I told you so,” came the response.
Everyone laughed and the bankers (myself included) skipped out into the world of darkening clouds, imagining that we’d never need the use of an umbrella.
I’d like to think I’ve learned something from the hubristic Celtic Tiger implosion. I’d like to think we all have. But I’ve read the European Commission’s White Paper on the Future of Europe and I don’t think we’ve learned much of anything at all.
The paper outlines 5 Scenarios for how the EU 27 countries will operate by 2025.
SCENARIO 1: Carrying on
This is the ‘sure isn’t everything grand, nothing to see here, please move along option’. In this scenario the polarisation of the EU isn’t addressed. The first priority of Scenario 1 is “to focus on…strengthening the single market”.
SCENARIO 2: Notheing but the single market
This is exactly what is sounds like, “the functioning of the single market becomes the main raison d’etre of the EU”. Everything else becomes irrelevant. It’s like a more honest Scenario 1
SCENARIO 3: Those who want more do more
This is termed “the coalition of the willing” option. The member states who want to address challenges within the EU can form groupings and work together to improve cooperation and deepen ties. Sounds reasonable, until you read that the areas that are to be given priority. You’ve probably guessed it, yep, it’s focus will be on “budgetary arrangements and greater harmonisation of tax rules”.
SCENARIO 4: Doing Less more efficiently
This option is a funny one. It starts on the false premise that the EU will “focus its…limited resources on a reduced number of areas”. 15 of the 30 wealthiest countries in the world are in Europe, so if the EU has limited resources it is because of a focus on socialising debt and privatising capital.
Nonetheless, there is in Scenario 4 the first mention of consumer rights and protections. Sadly, they also state this will “help close the gap between promise and delivery” and that “common standards will be set to a minimum”. It’s like telling someone that their pizza will be with them within 6-8 hours and expecting them to be happy when you deliver it in only 4hrs, cold. In sales this is called the ‘Under Promise and Over Deliver Option.
SCENARIO 5: Doing much more together
The sharing is caring option. This is the option I pegged my hopes on. Yes, it starts on about deepening the single market again. Yes it goes on about “much greater coordination on fiscal and taxation matter”. Yes, it even states that a “European Defence Union is created”.
But, it also states that citizens rights will be put above those of the Corporations and Banks that created the crisis. It promises to create and foster a European Identity, where all citizens are afforded the protections and rights of a European Constitution. Scenario 5 puts the people of Europe at the centre of Europe…
…only it doesn’t. None of these Scenarios even hint at anything as revolutionary as creating and fostering a European Identity.
Everyone of these Scenarios are market driven and the rights of citizens are an afterthought; something to be “set to a minimum”.
Five Scenarios that all carry, in the European Commission’s own words, “the risk of alienating…a society which feels that the EU lacks legitimacy”. Yes folks, they are aware of the problem, but they think doing more of the trickle down economics that caused the crisis will avert the next crisis.
A few months back I was at another financial get together. Once more, David McWilliams was the guest speaker. He gave an optimistic outlook for Ireland and our economy.
His predictions weren’t based on the global economic environment, they were more (to my mind) based on austerity fatigue and the behavioural economic phenomena of people saying “Feck it” and buying a new car.
David had identified the one thing that the European Commission failed to notice. That is that the people are the economy. The recovery, if there is to be one, will be driven from the bottom up and not the Single Market down.
European citizens are fed up of stagnation and having to put things like having a family on pause. The pent up societal demand of a life in economic limbo can be the driver of growth in the real economy.
The EU needs to recognise this and make it the centre of the 2025 plan, or, at the time of the next crash, the EU will collapse in on itself.
In Ireland we currently have no appetite for leaving the EU, but Brexit is everywhere. The election of Macron hasn’t stopped the disillusionment. The European Commission needs to wake up, people don’t live in an economy, they live in a society.
We need a Scenario 6. The McWilliams option.
ony Groves is a full-time financial consultant and part-time commentator. With over 18 years experience in the financial industry and a keen interest in politics, history and “being ornery”, he has published one book and writes regularly at Trickstersworld