Activities > WWWforEurope Activities 2013 > 2nd Policy Brief in Brussels

A call for a strategy shift in Southern Europe

On April 24th and April 25th, 2013, the WWWforEurope project and especially its second policy brief on “Policy options for the development of peripheral regions and countries of Europe” by Karl Aiginger, Matthias Firgo, and Peter Huber of the Austrian Institute for Economic Research (WIFO), was introduced to EU policy makers and presented to the press.

Meetings with Experts

In meetings with experts from the cabinets of Presidents Herman Van Rompuy and José Manuel Barroso, Commissioners Johannes Hahn and Olli Rehn, Karl Aiginger and Peter Huber presented the second policy brief, which proposes a strategy change for Southern Europe.

The fiscal consolidations which are necessary in Southern European countries should be combined with a strategy for growth and employment, giving active elements of the strategy a quicker start. New firms and reindustrialisation (including reform zones or industrial areas) should get higher priority.

No better point in time could have been chosen for the dissemination of the ideas in this policy brief, since unemployment figures continue to rise and public debt is on the increase in Southern European countries after five years of trying to reduce public deficits. President Barroso's remark that continued austerity may not be accepted by population highlights the need for a new policy even more.

The ideas most intensively discussed with experts from the European Commission and Council were that

  1. structure (of expenditures, taxes, regional funds) is at least as important as balances/debt levels,
  2. national ownership of reforms is essential, and blaming the troika about the hardships of consolidation is counterproductive,
  3. younger people and specifically female experts should take over a more active role in the economic and political reforms, and democratic support for reforms is necessary,
  4. new firms and jobs for the young people should have priority over big infrastructure (highways; with the exception of making public transport/railways functional),
  5. and that an active component in the consolidation strategy must exist and have the same urgency as expenditure cuts.
  6. Finally, reforms should be based on a vision where the European countries could be in 2030 with an analysis of their comparative advantages.

Presentation in the European Parliament

On April 24th, 2013, Karl Aiginger gave a speech at the Industrial Policy Round table in the European Parliament on the following topic: "European Industrial Policy - Systemic & integrated or isolated again?" The meeting was organised in order to prepare a resolution of the Parliament on the last communication of the Commission on industrial policy. undefinedDownload the presentation.

Aiginger – building on tentative research in the "Drivers for Change: Innovation, Industrial, and Innovation Policy" research area of the WWWforEurope project – warned that Europe should not react to lower energy prices in the US by halting its new industrial policy strategy, with its central tenet of sustainability and a flagship initiative that had been designed to create a resource efficient economy. Instead, the emission trading system should be revived and not abandoned, thus making emissions more expensive and favouring clean energy production and higher energy efficiency.

Matching the low energy prices of the US or low emissions standards in Asia are the wrong policy, says Karl Aiginger. The superior strategic response would be to boost energy efficiency, shift towards clean energy, close the gap in R&D and the quality of universities relative to the US, and to keep or enlarge the lead towards industrialising countries.

In specific energy intensive industries like steel, the programs to develop ultra low carbon technology, which have been started and look promising, should be accelerated. The share of manufacturing in GDP in Europe, which is targeted to increase from 16% to 20%, should be done on the basis of skills and innovation, high energy efficiency and clean technologies.

undefinedDownload the presentation.

Meetings with the Press

Finally, Karl Aiginger and Peter Huber met journalist from several newspapers, TV channels, and news agencies. In an interview with EURO-News Karl Aiginger called for an end to “unintelligent austerity”, meaning cross the board cuts in expenditures without vision and goal, without explanation and fairness.

It should be substituted by growth and employment friendly consolidation strategy, extending deadlines for expenditure cuts in the short run in exchange for commitment to tougher reforms in the future and investment in human capital. Calling for an end to unintelligent austerity does not mean that big spending is possible or advisable, but that cuts should be based on vision and strategy and be done once the European economy starts to grow again.

Some of the resulting interviews can be read on our media coverage page.