Concepts to create growth in Europe

Concepts to create growth in Europe

Poland’s Prime Minister Donald Tusk, the newly-designated President of the European Council, presented a common European energy strategy some months ago. Whether it is the Tusk initiative or another plan, a common energy strategy is one of the few tasks which should be carried out at European Union level, writes Prince Michael of Liechtenstein.

It is important that the design of any such strategy is based on real facts and not driven or limited by unsubstantiated emotion or populism.

Mateusz Szczurek, Poland's Minister of Finance, has proposed a European investment plan for infrastructure of some 700 billion euros. The money would be used to get European growth back on track. A 500 billion euro fund could be created under guidance from the European Investment Bank (EIB) and invested in the economically most rewarding infrastructure projects.

Finally we have a constructive proposal to bring growth back to Europe.

Important infrastructure projects do not only benefit individual countries but benefit the whole of Europe. Improvements to electricity grids are important for energy security. The time of national grids is over. There is already a cross-frontier grid and too much demand in one country will impact an entire region. Energy demand and supply is highly stressed already, even in Germany.

Investments in increasing the efficiency of European ports would be another example of such infrastructure projects.

These projects will create jobs and opportunities for business to create further jobs. Good infrastructure in transportation, energy or other projects will make the economy more efficient, sustainable and increase productivity.

There is one caveat - that business stimulus will only work if it is combined with a liberalisation of over-stringent regulations such as the European labour laws, competition laws and too much consumer protection.

The plan by Poland’s Finance Minister is a good starting point. It would stimulate business and create additional and sustainable jobs.

That all looks perfect. It is more important, and probably more successful, if the economy is stimulated by useful investment instead of concentrating entirely on monetary measures such as quasi-zero interest rates and bond buying programmes.

This appears to be the only reasonable response to the bad news on stagnating growth rates in the second quarter of 2014 in Germany and Italy compared with last year. Germany even recorded a minus growth compared with the previous quarter. The eurozone could be approaching recession once more.

Europe needs these optimistic and forward-looking initiatives. Agendas filled with ‘feel-good’ words such as the EU's Europe 2020 initiative, and others, are not good enough. The two Polish proposals will hopefully kick-off initiatives which we will actually see implemented.

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