European Union

A year ago, the OECD warned about how trade and policy uncertainties could significantly damage the world economy and further contribute to the growing divide between people. A year later, global momentum has weakened markedly and growth is set to remain subpar as trade tensions persist. Trade and investment have slowed sharply, especially in Europe and Asia. Business and consumer confidence have faltered, with manufacturing production contracting. In response, financial conditions have eased as central banks have moved towards more accommodative monetary stances, while fiscal policy has been providing stimulus in a handful of countries. At the same time, low unemployment and a slight pickup in wages in the major economies continue to support household incomes and consumption. Overall, however, trade tensions are taking a toll and global growth is projected to slow to only 3.2% this year before edging up to 3.4% in 2020, well below the growth rates seen over the past three decades, or even in 2017-18. While growth was synchronised eighteen months ago, divergence has emerged between sectors and countries depending on their exposure to trade tensions, the strength of fiscal responses and policy uncertainties. The manufacturing sector, where global value chains prevail, has been hit hard by tariffs and the associated uncertainty on the future of trade relationships, and is likely to stay weak. Business investment growth, also strongly linked to trade, is set to slow to a mere 1¾ per cent per year over 2019-20, from around 3½ per cent per year during 2017-18. However, services, less subject to trade jitters and where most job creation takes place, continue to hold up well. In parallel, growth has weakened in most advanced economies, especially those where trade and manufacturing play an important role, such as Germany and Japan, with GDP growth projected to be below 1% in both countries this year. In contrast, the United States has maintained its momentum thanks to sizeable, albeit waning, fiscal support. Divergence is also visible among emerging-market economies, with Argentina and Turkey struggling to recover from recession, while India and others are benefitting from easier financial conditions and in some instances fiscal or quasi-fiscal support.

This paper addresses the present state of play and future trends, uncertainties and possible disruptions of Artificial Intelligence (AI) and Big Data in the following areas:
Political: AI is biased, difficult to scrutinise and to estimate its power, and – more so when embodied in autonomous systems – potentially dangerous. Policy responses are accountability, transparency, safety and control, and public debate. These should be based on ethics. AI will lead to better governance, more debate, new policy actors and processes, a contest over centralisation, and the EU catching up. AI might progress in a revolutionary or evolutionary mode, lead to new political divisions, and change democracy. AI might be misused as a “superior orders” defence. What if data analysis changes or replaces democracy?
Socio-economic: Big Data is changing the role of data, is often dependent on sensitive information, is handicapped in the short term but better in the long term due to data protection, and its industry is in danger of monopolisation. AI lowers the cost of prediction, replaces human prediction and human labour and causes social problems, increased nudging and misuse of the term AI. AI will lead to more data, economic growth and more job market distortions. AI might lead to new industry giants, a request for more privacy, new state solutions, yet unknown jobs, AI taxes and increased state ownership. What if new economic ideologies emerge, singularity strikes or AI monopolies are broken up?
Geopolitical: AI is increasing the power competition between the US and China and gives both more power. Europe tries to create businesses and find its strengths. All are investing in military solutions and the west has a slight disadvantage here. AI will lead to a shakeup of the international system, hierarchies and networks becoming more powerful, and real-life deception being more difficult. AI might lead to China becoming the most powerful power overall and in AI. The future of AI R&D and the success of Europe’s broad approach is uncertain. What if there are two digital worlds, China becomes a data-privacy defender, and AI become targets?
Technological: Superintelligent AI is invested in and researched, challenged by philosophy, and possible this century. It might imitate the brain, be assembled together or be designed by other AIs. An intelligence explosion or a conscious AI could be possible, and might be the last invention of humanity. It would require long term funding, need to overcome many technical hurdles, be dangerous due to its intellect, possibly be contained with collective intelligence, and maybe have humans lose their jobs, safety or purpose.
Key questions for policy-makers: What makes European AI distinctive? What areas can and should we prioritise, if any? What should be regulated? How could and should the EU foster AI development, avoid monopolisation, provide data pools, use high data standards, link researchers and corporations, balance fundamental with applied AI research and private with state funding, boost applications, compensate for job loss, keep AIs away from dangerous actors, support EU foreign policy (neighbourhood, FPI, democracy and human rights, aid and development, economic freedom), improve our lives with AI, change the geopolitical AI race, deal with autonomous weapons and superintelligent AI and organise Foresight?

The Future of Government 2030+: A Citizen Centric Perspective on New Government Models project brings citizens to the centre of the scene. The objective of this project is to explore the emerging societal challenges, analyse trends in a rapidly changing digital world and launch an EU-wide debate on the possible future government models. To address this, citizen engagement, foresight and design are combined, with recent literature from the field of digital politics and media as a framework. The main research question of the project is: How will citizens, together with other actors, shape governments, policies and democracy in 2030 and beyond? Throughout the highly participatory process, more than 150 citizens, together with CSO, think tank, business and public sector representatives, as well as 100 design students participated in the creation of future scenarios and concepts. Four scenarios have been created using the 20 stories emerged from citizen workshops. They served as an inspiration for design students to develop 40 FuturGov concepts. Through the FuturGov Engagement Game, the project’s ambition is to trigger and launch a debate with citizens, businesses, civil society organizations, policy-makers and civil servants in Europe.

Global demand for transport is growing fast. On present trends, passenger and freight activity will more than double by 2050.Such growth is a token of social and economic progress. But it carries with it growth in energy demand and in emissions of CO2 and atmospheric pollutants.Greater reliance on rail can cut that growth. The world is becoming ever more urbanised and rail travel is well matched to urban needs.High-speed rail can serve as an alternative to short-distance air travel. Conventional and freight rail can complement other transport modes to provide efficient mobility.This book shows what can be done and how. Its scale is global, with a special focus on the needs and opportunities in India.

This report presents global projections of materials use and their environmental consequences, providing a quantitative outlook to 2060 at the global, sectoral and regional levels for 61 different materials (biomass resources, fossil fuels, metals and non-metallic minerals). It explains the economic drivers determining the decoupling of economic growth and materials use, and assesses how the projected shifts in sectoral and regional economic activity influence the use of different materials. The projections include both primary and secondary materials, which provides a deeper understanding of what drives the synergies and trade-offs between extraction and recycling.The report projects a doubling of global primary materials use between today and 2060. Population and converging per capita income growth drive the growth in materials use. However, structural change, especially in non-OECD countries, and technology improvements partially dampen that growth. Metals and non-metallic minerals are projected to grow more rapidly than other types of materials.

Foresight is about choice, decision and action – and not, as is repeated time and again, predicting the future and getting it wrong.
This Chaillot Paper aims to alert decision-makers to potential developments with significant strategic impact while they can still prepare for, or even avoid them. This is done using two methods combined: horizon-scanning as well as single scenario-building. Taken together, they produce plausible events set in 2021 – with strategic ramifications well beyond that. All 12 scenarios in this Chaillot Paper reflect the expertise and imagination of the researchers who wrote them: some explore potential conflicts, while others look at disruptive political developments, or indeed at crises with significant ramifications.
That said, all are designed in the hope of drawing attention to foreign and security policy aspects which are potentially overlooked, and all are extrapolated from ongoing and recent developments.

Under a monetary union, fiscal and monetary discipline have to go hand in hand if macroeconomic stability is to be maintained. The question is how to set up the right institutions to achieve this stability in a credible manner. This policy brief proposes a new institutional arrangement for the euro area to restore fiscal discipline. It places the responsibility for compliance entirely on the shoulders of the member states. It also provides for the mutualisation of 30% of the member states’ debt-to-GDP ratio.
This would help to maintain a stable currency and to limit the risk of contagion should another crisis occur in the future. However, this comes at a cost. Under the fiscal scheme proposed, member states, which would be fully fiscally sovereign, would need to run long-term sound fiscal policies to benefit from euro membership.
In addition, this brief proposes a reform of Target2 under which overspending economies would have to pay the financial cost of accessing extra euros, which would deter the accumulation of internal imbalances within the euro area. All this is expected to change the current fragility of the architecture of the euro, provide member states with the right incentives to abide by sounder economic principles and make them fully responsible for the policies they adopt.