PARIS, Sept 4 The incoming European Commission
should act immediately to boost investment in Europe and work
for a new EU treaty permitting closer integration of the euro
zone and looser ties with non-euro states like Britain, a
leading think-tank said on Thursday.
In a series of memos addressed to the new heads of the
European Union executive, the European Council of EU leaders and
the European Parliament, the Bruegel economic research institute
called for urgent action to revive growth through investment and
liberalising energy, capital markets and the digital economy.
Despite widespread reluctance in Europe to risk
renegotiating the bloc's governing treaty, with the risk of
losing referendums, the authors said institutional reform was
essential to stabilise the single currency.
"It would be a severe mistake to wait for the next crisis to
reopen the discussion," Bruegel director Guntram Wolff and
senior fellow Andre Sapir said in the keynote memo, to be
presented at a news conference in Brussels on Thursday.
The incoming European Commission, due to be unveiled by
president-elect Jean-Claude Juncker next week and take office in
November, must put forward a credible growth strategy in time
for its first EU summit in December, and start implementing it
by mid-2015, the authors said.
That programme should be based on deeper global trade, more
openness to immigration, improved education systems and a better
functioning internal market to improve the investment climate.
The German and Belgian economists called for measures to
improve demand, including a boost to public investment in
education and infrastructure by EU powerhouse Germany, as well
as supply-side reforms, notably in France and Italy, to
modernise labour markets and social policies.
They urged the new Commission to reject "unwarranted"
efforts by countries such as France to subordinate EU
competition policy to industrial policy goals to encourage the
emergence of "European champions".
While much of their economic policy advice resembles plans
already in the works in the outgoing European Commission, their
call for a far-reaching treaty reform may encounter resistance
from EU leaders chastened by this year's big Eurosceptical vote
in pan-European parliamentary elections.
Treaty change is essential, they contend, to create a fiscal
union in the euro area with a common financial backstop for the
EU's nascent banking union, common unemployment insurance and
labour market policies and a finance minister empowered to veto
national budgets that breach EU rules.
It would also enable the creation of a new, more limited
"second tier" membership status for Britain and other countries
which would participate in the single market but not share all
other EU policies, the authors said.
"A result of treaty reform could be that the UK stops
participating in the EU budget, while remaining in the single
market for goods, services and capital, and ideally also
labour," they said, arguing that Britain should be given
minority rights but not allowed to block steps to strengthen the
British Prime Minister David Cameron has called for a
renegotiation of EU membership terms and promised to put the
results to an in/out referendum in 2017 if he wins re-election
The report also called for a streamlining of the way the
European Commission works to reduce bureaucracy, curb
unnecessary regulation and review the pay and benefits of EU
staff to counter negative public perceptions.
(Writing by Paul Taylor; Editing by Dominic Evans)