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Analysis
Europe in search of a new narrative

Europe in search of a new narrative

Safety and security dominate voters’ concerns

by Kalin Anev Janse in Luxembourg

Wed 4 Jan 2017

Western society is shifting. Seismic changes, from Britain’s vote to leave the European Union to the US presidential election, have challenged the status quo. For the time being at least this shift seems to be confined to Europe and America, who are searching for a new narrative. Now, after Donald Trump’s victory, all eyes are turning to Europe.

Europe faces three crucial elections in the Netherlands, France and Germany. Together, the three economies represent 56% of the euro area, and are three of the six founding EU members. They signed the Treaty of Rome along with Belgium, Italy and Luxembourg, creating the European Economic Community and a common customs union in 1957. The treaty will commemorate its 60th anniversary on 25 March.

The collaboration of the Netherlands, Germany and France has been very successful. After the second world war they rebuilt and strengthened their economies. Since 1960 these countries have experienced impressive growth in real GDP per capita, outperforming the UK and US on this measure over 60 years.

But they did more than that. They ensured that large parts of society benefited from this economic growth. They implemented policies that distributed wealth more fairly, such as affordable first-class education, social security to cover rainy days, and tax schemes that gave incentives for ambitious people while supporting the less fortunate. The differences with other developed economies is striking. In the US, the poorest 40% of earners bring home just 16% of the national income, while the richest 10% earn 29%. In the Netherlands, France and Germany, the numbers are more equitable – the bottom 40% brings home 22%, and the top 10% around 23%.

These figures help explain why income inequality was a key subject during the US election and UK referendum. The European countries that will head to the polls in 2017 have fairer and more equal income distribution, mainly due to the European welfare model. Though long under fire, this might now appear to be the right recipe to deal with the problems that globalisation brings.

The overall economic picture in Europe has changed in 2016. With the exception of Greece, all European countries have returned to growth. The EU grew at a rate of 1.8% in 2016, while the US managed only 1.6%. The unwavering political support of key euro area countries allowed the Union to survive its crises successfully, despite pessimistic predictions.

Before the spring of 2015, the No. 1 concern in Europe was the economy. This has shifted. The chief concerns today are immigration and terrorism, according to the latest Eurobarometer opinion survey.

By their very nature, immigration and terrorism are cross-border concerns. Their resolution requires international co-operation. It is here that the strengths of European collaboration become apparent.

Europe was able to limit the negative consequences of the first wave of immigration over the course of 2015 and 2016. Immigration numbers went down dramatically. Terrorism is still a large concern, but collaboration and information exchange can reduce the threat.

Europe will remain deeply concerned with the aftermath of the UK vote to leave the EU; the finalisation of the third Greek support package; US-Russia-EU relations; EU-Turkey relations; European Central Bank policy; and developments in financial markets. Anti-globalisation rhetoric, anti-trade movements and continued euroscepticism are potential headwinds.

All these issues will come together in the Dutch, German and French elections. The coming debate will focus on Europe’s core values. Safety and security are what really matters. If something dramatic or unexpected happens, the founding members might gather again, as they did after the UK referendum, and set the narrative for the coming years.

Kalin Anev Janse is Secretary General of the European Stability Mechanism. This article reflects his personal opinion.

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