Europe: What to watch out for in 2016-2017

The European Union seems to be moving from one emergency to the next. Europe’s leaders are in crisis-fighting mode: reactive, improvising, often uncoordinated – but ultimately modestly successful.
The Eurozone has not splintered; Russia is smarting under Western sanctions; some burden-sharing on refugees has been agreed. Busy with short-term problems, however, Europeans have taken their eyes off more profound, long-term challenges. How the European Union copes with its immediate problems in the next couple of years will determine how the continent will fare in decades to come.
In this White Paper, we – the Global Agenda Council on Europe – are analysing some of the most pressing issues confronting the EU in 2016-2017. We present the choices that European leaders must make in the years ahead and explain how these could shape the Union’s medium to long-term development. To illustrate how different policy choices interact, we have drawn up two fictitious scenarios of how the EU could evolve in the next 10 years.
The immediate economic concerns that dominated the European agenda in 2008-2014 are lessening. The cyclical upswing in the European economy, however, must not make governments complacent about the need for reforms. Faced with stagnating or shrinking working-age populations, European countries simply must fix their productivity problem to generate long-term growth. In innovation and digitization, Europeans often seem obsessed with data privacy and protection rather than grasping new opportunities. The European Commission’s laudable attempts to integrate and improve EU markets – for example, for energy and capital – have so far been slow to get off the ground. The arrival of millions of migrants, asylum seekers and refugees is a great opportunity for an ageing Europe, but only if governments, together with the private sector, act swiftly to help the new arrivals find jobs.