The EU can afford to invest trillions in support of employment

European Parliament, Plenary session week 29 2014 - Statement by Jean-Claude Juncker President of the Commission elect. (EP Audiovisual Services, 15/07/2014).

European Parliament, Plenary session week 29 2014 – Statement by Jean-Claude Juncker President of the Commission elect. (EP Audiovisual Services, 15/07/2014).

Eurostat, the EU statistical service, has recently released data showing that, while the government indebtedness increases, the industrial production retreats. Of course Eurozone doesn’t run any danger of losing its competitive edge in world markets. European goods and services exports usually leave a solid positive result, so the Union and more so the Eurozone don’t run any structural risks. The euro is more that well anchored in foreign trade surpluses. The problem is though that the continuous retreat of the industrial sector deprives the European unemployed, men and women, 25 million of them, from any hope to find a decent job where it counts; industry. This fact seen together with the rising government debt creates the impression of an irreversible falloff. Let’s see if this as it looks.

A diminishing industrial sector

According to the latest statistics published by Eurostat, industrial production fell again last May. The relevant Press release goes like this: “In May 2014 compared with April 2014, seasonally adjusted industrial production fell by 1.1% in both the euro area (EA18) and the EU28, according to estimates from Eurostat, the statistical office of the European Union”. This reality doesn’t tell the whole story. The truth is that industrial production in Europe keeps falling during last ten years without any visible possibility to overturn this dreadful tendency. Understandably, this trend has been tormenting all the developed economies of the world since the early 1990s with the expatriation of industrial production.

Blame Globalization

This was a purposeful decision taken in the US and the EU under the ground breaking novelty of ‘globalization’. Until then the developed countries jealously guarded production within their borders. Globalization completely reversed that and led to the rise of the emerging giants like China. No doubt the brave new world that emerged from globalization is a consciously intended and meticulously planned policy of the remaining world power(s) after the fall of communism in Europe.

The problem is however that in today’s globalized world the US managed to maintain unemployment at sustainable levels even during and after the latest financial crisis. Unfortunately, more than half of Europe is unable to perform in the same manner. That’s why Jean-Claude Juncker the newly elected President of the European Commission after his approval by the European Parliament promised support to the “social market economy, including a €300 billion investment package to boost growth, employment and competitiveness.”

No ‘ideological’ stubbornness

Mind you this is coming from a conservative center-right politician, who has obviously abandoned the neo-liberal obsessions about the market’s abilities to adjust everything. Clearly, the center-right parties which govern Europe today want by any means to avoid the obliteration that goes together with the power of market to regulate everything.

Nonetheless many people wonder if the EU has the required financial powers to finance this extra €300bn of investments in social market economy. To put it differently; can the EU governments borrow the extra funds in order to come up with additional investments in the social economy? In all likelihood the need for more government borrowing would not be of the same amount, because the relevant programs would require participation of private money or communal means in the projects. The usual percentage of public funding in similar EU programs is 50%. In this case this percentage may be higher, due to its special character, say 66.6%. At the end the extra public borrowing to finance the entire program of a total value of €300bn may be reduced to €200bn.

Can Europe find €300 billion?

This rough accounting leads to the other Eurostat Press release referred to above concerning public debt in the EU. According to this, “At the end of the first quarter of 2014, the government debt to GDP ratio in the euro area (EA18) stood at 93.9%, compared with 92.7% at the end of the fourth quarter of 2013”. Given that the annual gross product of Eurozone is around €9.6 trillion the new burden of €200bn is a mere 0.021% of GDP. Predictably this €300bn new program to support social economy and employment as announced by Juncker will not be realized in one year. As a result, the extra public debt of 0.021% of the GDP will not be charged to a single yearly budgetary exercise. If the time span of the new investment scheme is extended in say three years, the annual extra debt load will be even less at 0.007% of GDP.

They are more indebted

Now with the rest of the developed world governments, from the US to Japan being indebted far above the EU, this extra 0.007% of GDP is really nothing. It suffices to note that the public debt in the US exceeds one annual GDP (100%), while in Japan this percentage is more than the double (200% of GDP). It goes without saying then that this program promised by Juncker to invest €300bn in peoples’ lives should not present any difficulties to master. In short, this Juncker proposal may prove too little compared to capabilities and needs. The EU can invest even trillions without risking its creditworthiness.

 

Advertising

the sting Milestone

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

How China raised the stakes for electric vehicles

10th ASEM in Milan and the importance of being one: EU’s big challenge on the way to China

Erasmus+ 2021-2027: more people to experience learning exchanges in Europe

MEPs want to fund crucial areas to stimulate European growth

What’s the difference between carbon negative and carbon neutral?

5 ways the digitisation of the global logistics industry can increase trade – and reduce poverty

What’s going on in Chernobyl today?

These are the world’s most competitive economies

From landlocked to land-linked: how the UN is helping some of the world’s poorest countries

International trade statistics: trends in third quarter 2019

Partnerships with civil society and youth ‘essential’ for a future that leaves no one behind: General Assembly President

What makes a good healthcare professional?

EU-US resume trade negotiations under the spell of NSA surveillance

Does Indonesia have the world’s most complicated elections?

UN health agency developing COVID-19 virus treatment master plan

#TakeYourSeat at the UN Climate Change Conference: a way for all people to join the global conversation

Global Goals top General Assembly President’s priority list

A busy year in the UN Security Council: more openness, diversity mark 2019

Why the world is not as globalized as you think

Can self-charging batteries keep us connected for ever? A young scientist explains

More than nine in ten children exposed to deadly air pollution

New legislation on transparency and sustainability of the EU risk assessment model in the food chain

Making money from meeting the SDGs? An overarching approach to sustainable development.

Lack of investment and ambition means Youth Guarantee not reaching potential

EU joint response to disasters: deal reached with Council

General Elections in Spain: Twitter organises the first digital debate to empower young people.

UN Assembly calls on all States to observe Olympic Truce throughout Tokyo Summer Games

Deeper reforms in Korea will ensure more inclusive and sustainable growth

Celebrating Gaston Ramon – the vet who discovered vaccinology’s secret weapon

The Europeans back Russia-Turkey on Syria: A ‘Waterloo’ for Saudis and their Crown Prince

JADE Generations Club: Connecting perspectives, changing Europe.

SMEs turning to alternative financing instruments as growth slows in bank lending

How biotechnology is evolving in the Fourth Industrial Revolution

The climate and COVID-19: a convergence of crises

Smart cities must pay more attention to the people who live in them

Continue ‘their mission’ urges UN chief, as the victims of the Baghdad bombing are remembered, 15 years on

UN chief condemns air strike that hit school bus in northern Yemen, killing scores of children

Coronavirus has shown us why we urgently need to make a basic income a reality

TTIP fight round 6: last chance for the negotiators to finally open up as they touch the Brussels ring

First seat projections for the next European Parliament

Where are the world’s nuclear weapons?

What does artificial intelligence do in medicine?

An ECB banker wants to change the European social model

Tackling water scarcity: 4 ways to pull H20 out of thin air

Where are people most proud to be European?

Tax revenues in Asian and Pacific economies rebound

Africa is helping the drone industry get off the ground. Here’s how

Britain’s Brexit election is its most volatile in memory – and 3 other superlatives about the snap poll

Financial support for workers affected by no-deal Brexit

“The winner is who can accelerate the transition to a new digital era”. The Sting reports live from EBS 2015: a Digital Europe 4.0

Explained, the economic ties between Europe and Asia

The European Parliament fails to really restrict the rating agencies

Financing the 2030 Agenda: What is it and why is it important?

From drought to floods in Somalia; displacement and hunger worsen, says UN

How can we produce enough protein to feed 10 billion people?

Foreign investment to be screened to protect EU countries’ strategic interests

EU unfolds strategy on the Egypt question

OECD Secretary-General statement on Europe Day

The opportunity of studying Medicine abroad

Central Asia bloc has important role in ‘peace, stability and prosperity’ beyond region, says Deputy UN chief

More Stings?

Advertising

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s