“But in their own way, Europeans have created a place where they are guaranteed rights to what others desire: life, liberty and the pursuit of happiness.” This is the conclusion of a recent article in “The Economist.”
In a world where the rules are changing abruptly, Europe must fight to maintain its strengths. In many countries, freedoms are under threat, power is growing stronger, and oligarchies are dominating. This is not the case in Europe.
Europe must be at the heart of this new equilibrium that is emerging. It must gather its strengths before redeploying. Strengths and weaknesses will be structured around four axes.
The first is that of the institutions with two priorities which must facilitate the autonomy of Europe.
The Capital Markets Union, renamed the Savings and Investment Union (SIU), aims to maintain the €300 billion savings corresponding to the external account surplus in Europe. These savings must find vehicles that will keep them in Europe while financing investment.
The second priority is the complete internal market in order to have a vast market allowing for scale effects and facilitating the emergence of European champions so as to no longer be so dependent on foreign technologies. Europe must be able to exist through its technology.
The second axis is innovation, which should enable the emergence of cutting-edge technologies and thus improve Europe’s productivity. Productivity gains are the necessary condition for increasing income over time. Europe’s gains are insufficient, explaining the divergence in trajectory with the United States. This is what Mario Draghi explained in his report. One component of this axis on innovation is military development. We remember in the 1960s the common dynamic in the United States between the military and industry. Europe must promote overlaps between these two branches.
The third area is energy. This is a weak point since Europe imports the majority of its fossil fuels, which represent 70% of its primary energy consumption. Renewable energy developed rapidly after the 2022 crisis and now provides a greater contribution than fossil fuels to electricity production. We must go further. Nuclear power is a choice that has been revived to stabilize electricity production when conditions do not favor renewable energy.
The fourth axis is the demographic challenge resulting from the rapid aging of the population. This aging weighs on the dynamics of growth and penalizes our capacity to innovate while raising major questions about the distribution of income between active and non-active people but also about the nature of the flows of foreign populations to allow innovation by rejuvenating the population.