1. The notion of convergence is at the heart of the Economic and Monetary Union
1.1. What do we mean when we talk about economic convergence?
The Chair stated that the notion that the EMU would need some mechanisms to assure a degree of convergence was clear when the Maastricht Treaty was signed. When a monetary union was developed and designed, some degree of convergence was always seen as important. However, convergence can mean different things to different people, and the panel will discuss the question, ‘What do we really mean when we talk about economic convergence?’ In the Chair’s view, countries can successfully function in the monetary union even with different income levels, as long as they avoid excessive macroeconomic imbalances. There have been some valuable experiences in that respect in the Member States.
Preventing imbalances is more important for a well-functioning monetary union than nominal or real convergence, even though the latter would be very desirable. Convergence should therefore be understood as achieving a better balanced economic growth path and more policy convergence.
1.2. It is possible to have countries with different per capita incomes in a Monetary Union
A representative of a public authority recalled that, at the time of the creation of the common currency and the EMU, some thinkers argued it was not possible to have monetary union without a common macroeconomic policy, while others said that the macroeconomic policy had to be in place before a common currency could be contemplated; this was a ‘chicken and the egg’ question. There has never been a common currency like the euro, and that means there is not one single way to introduce it; there are many ways.
Europe can have, and does have, economies that have a different degree of development, different incomes and different specialities. Germany is very powerful in many areas, including cars, aircraft, and chemistry. France is well positioned in the area of luxury goods, while Luxembourg is very efficient in financial services. All Member States have comparative advantages, strengths and weaknesses, and it is an illusion to believe that the European Union could have a macroeconomic policy that would be the same for all of its members, that would deliver exactly what every country needs.
Europe is currently in an intermediary situation; EU Member States, and the EMU mechanisms, have done all they can at this point. This includes the Stability and Growth Pact (SGP), the Macroeconomic Imbalance Procedures (MIP), and the EU transfers and cohesion funds, which are not part of the EMU but have to be considered as part of the whole picture.
1.3. The European Union and the euro area have a remarkable economic governance toolbox at their disposal
The Chair commented that as long as there is no economic government in the euro area, there is a need for a rules-based approach, with the Stability and Growth Pact, the Macroeconomic Imbalance Procedure and the European Semester.
A representative of a public authority stated that the European Union and the euro area have a remarkable economic governance toolbox at their disposal to enhance convergence and reduce imbalances. Its full potential has not yet been used. The Stability and Growth Pact has been the cornerstone of the euro area economic and budgetary policy co-ordination on an equal footing with the monetary policy pillar. The deepening of the EMU depends very much on how Member States can jointly demonstrate an ability to follow a rules-based approach, although the speaker noted that they do not mean an automatic following of all the rules; there is considerable flexibility within the Stability and Growth Pact already. However, Member States too often try to bend some of the rules.
1.4. Some problems of the EU are not exclusive to Europe
A public authority representative stated that the European monetary union raises some problems that are not exclusive to Europe. In Italy, for instance, there are very significant macroeconomic differences between the north and the south, but there are also significant disparities between different parts of the United States and of China, where some regions are growing very quickly, and others are very poor. This is a problem faced by many countries; as long as Member States are responsible for their own economic policy, it is very difficult to achieve economic convergence. There is also the question of what is meant by convergence – whether this is real convergence, GDP per capita, or cyclical convergence – as well as what the roles of the different institutions, the ECB, the Member States, and the role of the European Union are. Everything that helps real convergence also helps cyclical convergence.
2. The European economy is doing well overall; the European Union and the euro are success stories
A public authority representative commented that there is a need to recognise the benefits that the EMU has already brought to Europe. The euro has repeatedly proven itself to be a robust currency, fostering a stable monetary climate and delivering material benefits: inflation has been kept under control and this has led to lower transaction costs; indeed all economic players benefit from lower interest rates: households, when they purchase a property, companies when they invest, but also governments and hence taxpayers. The euro is also simplifying day-to-day life for citizens and promoting capital market integration - financial markets are more attractive to domestic and foreign investors, more liquid, and thus more efficient –, facilitating easier price comparison which has increased cross- border trade and has given euro members a global voice on the international scene.
Another public authority representative agreed that the main task for politicians is to explain these benefits to EU citizens. One example is the campaign for the presidency of France: there, the extreme right suggested abandoning the euro. This was a possibility for some time, but now that their candidate has officially announced that this is her policy, there have been many arguments about what this would mean. The latest polls show that 80% of French people do not want to leave the euro, which, according to this speaker, is a positive indication that trends can be changed. It is important to explain to people what the benefits of Europe are, because the populations of European states take them for granted.
The single market is another good example of this: those who have it regard it as the most normal thing in the world, and only realise the negative consequences of not having it when it is taken away from them. This is demonstrated by Brexit: the United Kingdom wanted to leave the EU, but remain in the single market. If the EU single market is very precious, it must be explained. When politicians explain the aspects that do not work, it should also be made clear that this is not generally the fault of Europe, but that much responsibility is in the hands of the Member States. Politicians find it easy to scapegoat Europe for decisions, and journalists rarely ask why these politicians did not object to these decisions during the negotiations. Politicians have to explain what is the responsibility of Europe, and where national responsibility starts, although this is not always an easy exercise.
The Chair stated that they agreed with this: it is not easy to do this, but it is necessary. The positive developments within Europe are not sufficiently recognised. For good reasons, there is a tendency to focus on what still needs to be fixed, but this often leads to forgetting that many things are not so bad. Economic performance is fairly good, but is an issue that goes beyond the economy itself.
Regarding the economic environment and income distribution, Europe is doing much better than is often perceived; from a per capita perspective, economic growth in the euro area is now back in line again with the US, just as it was before the crisis; income distribution has not deteriorated much in Europe over the last 10 years, while it has deteriorated massively in the US, China, and in other parts of the world. In other words, benefits from growth are spread more equally in Europe than in America. In Europe 80% of the population has seen real income growth in the last 15 to 20 years. In the US that was the case for only 10 20%. Europe’s social safety net is the best possible answer to the growing scepticism regarding globalisation that can be seen in many parts of the world.
A third public authority representative summarised that although there is a great deal of discussion about the problems faced by the European Union, it needs to first be made clear that the European Union, and the euro, are success stories. The EU has been very successful, and is prepared to answer the questions it faces; it has demonstrated good judgment in handling the financial crisis. There still remain some weak spots to be handled, including Greece, but Europe has now set up a Banking Union, and it is preparing the CMU. It has built firewalls like the ESM, which are very important for the euro area and the European Union, and they are working very well.
3. The euro in itself cannot solve the structural problems of the the different countries. It is therefore essential that governments should ‘do their homework’
A public authority representative stated that the economic policy community is discussing different proposals, such as increasing reliance on ‘disciplining’ market forces or the intergovernmental enhancement of economic surveillance for getting economic policy making right. It is necessary to discuss these options and evaluate them thoroughly. However, there is no need to wait for an improvement of the already well-developed and sophisticated multi-level governance at the European level. It is indeed the task of member countries to stick to the rules at the European level and strive for a bold structural reform agenda to restore the conditions for sustainable growth, prosperity and convergence. It is above all the member states’ responsibility to set up the right conditions for sustainable growth and convergence.
3.1. Structural reforms are needed to boost potential growth and productivity growth in the euro area and to improve the business climate in some Member States
A representative of a public authority noted that in the Economic and Monetary Union, monetary policy is centralised but important parts of economic policy remain national. All of the EU’s Member States are responsible for fixing the problems within their economies. Structural reform is a very important concept in this context, which includes a number of aspects. The issue of productivity also needs to be looked into further, as do the environment and Europe’s social safety net, which are areas in which Europe leads the world.
Another public authority representative stated that the question of structural reforms is a very important one, but responsibility for such structural reforms rests with the EU’s Member States. The causes of the stagnation of investment in Europe are in great part structural; notably, there are many obstacles on the supply side, including the operating margins of many EU enterprises and taxation that impedes business investment. Structural reforms are therefore essential for stimulating investment growth in Europe, because such measures have the capacity to improve the business climate in a sustainable manner and would increase the resilience and adaptability of Member States.
In such a context, Member States need to take measures that improve the allocation of resources, increase productivity and competitiveness and strengthen resilience. Reforms should not only aim at labour market flexibility but also at the proper functioning of product markets; they have to address competition as well as regulatory challenges; they have to support innovation and enhance institutional quality. Also, the vigorous implementation of the Banking Union, including bail-in and bank resolution, is important, while judiciary systems should support the workout of problem loans. Macro-prudential instruments should be used to contain unsustainable lending to the private sector.
The realisation of these measures is often fiercely resisted by vested interests – predominantly few actors that might lose out from reforms. Product market reforms seem to be among the most contested, although their positive impact on GDP and employment at limited or no budgetary cost is well documented.
A third public authority representative pointed out that he has been finance minister for two and a half years, which is a very long time compared with certain predecessors. When the country specific recommendations are sent out every year by the European Commission, they always recommend making structural reforms, because countries spent too much money in the past and now do not have enough for investment in the future. Health systems and pension systems remain unreformed; countries other than Greece face problems with their pension systems. As such, there needs to be structural reforms in the Member States, but also structural reform at the EU level; this recommendation is also made in the Five Presidents’ Report.
3.2. Increasing incentives for Member States to stick to the rules and engage in reforms
A public authority representative stated that incentives to comply with common rules and with a stronger monitoring of national fiscal policies should be set up. Europe needs to move towards mechanisms that provide strong incentives to comply with the rules and implement structural reforms. On the basis of the current treaties, room for manoeuvre is limited. One reform would mean stricter conditionality for payments from the EU budget and structural funds. Another proposal is a system of benchmarking for economic policies and outcomes to facilitate comparison among Member States and stimulate reform efforts.
Another question is whether benefits, or sanctions, are necessary: e.g. if a Member State wants money from the funds, it would have to prove that it has engaged in structural reforms. These contracts cannot be changed on the EU level, because 27 Member States would need to agree to amend them. However, some benefits can be put in place to encourage structural reforms: all governments and all members of the ECB know that for finance ministers, current rates of interest provide benefits, but they are not an advantage for the whole market. When interest rates rise, Member States that have made no structural reforms will indeed have problems with financing their budgets. However, there is now a window of opportunity to begin structural reforms, both of Member States and of the EU. But although improved economic governance may facilitate reforms, it cannot remove all responsibility from Member States.
3.3. Do we need transfers to promote economic convergence?
The Chair observed that since the euro crisis, excessive macroeconomic imbalances and divergences have largely disappeared within the monetary union, not least because of some ESM programmes. It can be asked whether transfers are necessary to promote convergence; transfers from richer to poorer countries are provided by the EU budget, and have been since the beginning of the EU. Poorer countries can obtain up to 3% of their GDP. If the EU budget did not exist, the question would be different for the euro area. However, with the EU budget, there is a great deal of money flowing between countries, and the Chair does not see any reason to add to this.
Despite this, a small fiscal capacity, in the form of a stabilisation fund or an insurance scheme, could strengthen risk-sharing and tackle dramatic asymmetric shocks in the euro area without raising permanent transfers or debt mutualisation. In addition, risk-sharing through financial markets can be promoted through completing the Banking Union, by setting up a backstop for the Single Resolution Fund, and a common deposit insurance once legacy issues have been sorted out and general de-risking has progressed. The Capital Markets Union would be another way to ensure greater financial integration, and thus more economic private risk sharing.
A public authority representative stated that the transfers and cohesion funds are not part of the EMU, but have to be considered as part of the whole picture. In Italy, the European Union has the support of less than 50% of the population, despite receiving €32 billion per year. Some might be of the opinion that this is not enough, but this does not indicate that Europe ‘has no heart’ or does not demonstrate its solidarity.
As such, Europe is ‘in the middle’, between giving all responsibilities to the European Union and keeping all responsibilities with the Member States. It is not a good time to create an EU government that can decide all of these questions on its own. Europe has done what it can in terms of monetary policy, with the actions of the European Central Bank, and the single market has been created and the CMU is being built. However, all of the EU’s Member States maintain a large amount of responsibility, and are responsible for fixing the problems within their economies.
The Chair added that transfers are the same in every country. The EU has to make transfers, but this does not solve the problems of Member States that are on a lower economic level and receive more money from the richer countries. Europe has cohesion funds and structural funds, and it is very important to employ these funds, because doing so helps to bring the Member States, and the economic development of these states, closer together. Europe is also back on a path of growth, unemployment is decreasing, and growth per capita is similar to that in the United States, so it is not the case that there is a crisis in Europe. The EU has some problems to be solved, but they are solvable by implementing national structural reforms.
4. Deepening the Economic and Monetary Union needs a solid foundation built on mutual trust and confidence
4.1. It is difficult to make progress in deepening the EMU so long as existing rules have not yet been met by all Member States
A public authority representative stated that individual states have responsibility for managing their countries’ different structural reforms, but on the European level, it is important for them to keep the rules that have already been created. There are many different agreements, but in the negotiations between the different euro area countries, the speaker sees that not all of these agreements are fulfilled. The average level of debt to GDP in the euro area is around 90%, despite it having been agreed that the level should be 60%. There are good ideas about what should be done next on the European level, but it can be difficult to make progress when existing agreements have not yet been met in all parts of the Union. During the Estonian presidency, this issue will be emphasised.
4.2. Complying with existing rules and procedures should be the short term priority for improving the EMU
A representative of a public authority thought that there are already enough rules, but these rules need to be adhered to. The speaker recalled that they were ‘astonished’ to hear the President of the European Commission, when asked why France is allowed to have a higher deficit, reply, ‘Because it is France’.
Another public authority representative stated that for a number of Member States, the deepening of the EMU is very much dependent on how they can jointly demonstrate their ability to follow the rules based approach. This should not be a ‘blindfolded’, automatic following of the rules; there is considerable flexibility within the Stability and Growth Pact. However, Member States all too often try to bend the rules.
A third public authority representative agreed that there should be no treaty change. People are tired of treaty changes, and rightly so; it is more important to apply the treaties that already exist. If the EU complies with its rules, it will have fewer problems. In politics and the economy, it takes some time to achieve results; levels of debt to GDP cannot be reduced from 90% to 60% immediately. Belgium’s debt stood at 135% of GDP in the 1990s, and it took them nearly 20 years to decrease this to 100%, whereas a country can double its debt in a couple of years. As such, there is a need to be very careful and cautious.
In addition, from 2008 to 2013, Luxembourg’s debt rose from 7% to 23%, and it took a great deal of effort to stabilise debt levels over the course of the last three years. It is very difficult to even stabilise debt, because once a country is spending more than it earns, its deficit continues to grow. Everyone has to take responsibility for this, including Member States, and the tools exist to address it: this can be called structural reform, or lowering expenditure at a public level. There are many methods, which Member States can adjust, and which will be their responsibility.
4.3. Increasing financial stability by implementing and enforcing the rules more vigorously
It is important to remember that the debt criterion sits alongside the deficit threshold in Europe’s fiscal governance rules. The high debt levels have to be taken seriously, as the low interest era will not last forever, and Europe’s ageing population will put additional pressures on long-term fiscal sustainability. The Commission has to fulfil its task in overseeing how the debt reduction target is met and whether this is persistent. This would contribute significantly to strengthening financial stability within the EU. However, Europe must avoid trying to promote the deepening of EMU on false pretences, as deepening itself will not be enough. There has to be a clear political will to follow the rules based approach and to implement the structural reforms, which are inevitable in a better integrated EMU.
With a view to increasing economic resilience and supporting sustainable growth, new institutions have been established and procedures strengthened. While there might be a need for institutional fine tuning, the set-up seems sufficient in principle, but the implementation and enforcement of rules and procedures are not. Thus, first of all each and every actor has to stick to the agreed rules, not least in order to avoid negative spill-overs to others. Especially Member States in breach of the requirements of the central instruments for coordination, e.g. Stability- and Growth Pact, the Fiscal Compact and the Macroeconomic Imbalances Procedure, or those hesitant to implement the Banking Union, have to do their homework. In addition, the European Commission has to implement and enforce the rules vigorously and even-handedly – including imposing sanctions if foreseen by the rules – to get incentives right.
4.4. Delivering what has been decided
A public authority representative stated that the European Union should also prioritise finishing the work undertaken, including the Banking Union. In general, Europe needs to speed up: it takes too long to make decisions. There have been discussions regarding a common level base for corporation tax for five or six years, but it is a very important question for all Member States, and a decision needs to be accelerated. Secondly, since Jonathan Hill left the European Commission, not as much has been heard about the CMU being a good idea, and work on it has stalled somewhat. The EU should begin by finishing the business that remains to be done.
Procedures such as those to limit tax base erosion and profit shifting (BEPS) have been started, and the speaker regards this as a good idea, but this needs to be implemented. Cooperation also needs to be enhanced and strengthened: it is not possible that all 27 countries will proceed at a similar pace in all economic areas but much can be done on a cooperative basis in 10 or 12 countries. This is also a question that relates to the presidencies over the next one and a half years.
4.5. The European Union should concentrate on ‘big points’
The public authority representative continued by stating that the European Union should concentrate on ‘big points’, rather than details, although it is also necessary for rules to be detailed. The first big point is immigration and security, and what the European Union is doing about this, because insecurity such as this impedes growth. The second issue is that of climate: all the countries of the EU have signed the Paris Agreement, and there needs to be a focus on what the European Union is doing to meet these climate goals. Another important issue is digitalisation, which is a process that is still ongoing, and there has to be consideration of how the European Union will compete as a single market against the world’s big players.
Europe needs to identify the rules that it has, stick to them, finish its unfinished business, and concentrate on the critical issues that it needs to elucidate. It will be necessary to find solution together, because small countries cannot solve this problem by themselves.
4.6. A ‘stepwise’ process
A representative of a public authority stated that the deepening of the EMU has to be a ‘stepwise’ process; much managing of expectations will be involved. Europe definitely must avoid trying to promote the deepening of the EMU on false pretences, as the deepening in itself will not have the desired effect. There has to be a clear political will to follow a rules based approach and to implement the structural reforms that are inevitable in a more integrated EMU. The word ‘Economic’ in ‘Economic and Monetary Union’ does not just refer to budgetary policy coordination, it means also a functioning financial sector, including the Banking Union and capital markets.
Another public authority representative added that there are probably five major issues that need to be prioritised. This will then create a good programme for the next three and a half years: finishing unfinished business, creating growth and employment, dealing with the ‘big points’, and beginning a programme of enhanced cooperation among the countries that want to be involved. Convergence has just begun; enhanced cooperation could create a new perspective on this, because different Member States have different situations, and economies can be brought closer together on a speedier basis. Making a decision with 27 Member States is difficult; it is even difficult to make decisions within the Eurogroup, which consists of 19 countries with a common currency. That the ‘outs’ can make decisions that will affect the ‘ins’ does not work.
The Chair observed that there appears to be a broad consensus about what should be done: sticking to what has been agreed, finishing unfinished business, and using enhanced cooperation.
4.7. Risk sharing and risk reduction should go hand in hand
A representative of a public authority stated that there is the possibility of doing more together in Europe. Addressing these issues requires a step by step approach, and those countries that are doing well or better, or are fulfilling the Maastricht criteria, clearly have some sense of additional solidarity. However, the speaker’s country is only prepared to engage in this cooperation if this includes both risk sharing and risk reduction. This is an expression that is used frequently in relation to the European Insurance Deposit Scheme, but runs ‘like a red line’ through the whole issue of cooperation in the EU.
If other countries are reducing their deficit and taking the appropriate measures, then in parallel, solidarity mechanisms can be developed; these should not be permanent, but limited in duration. These should help to cover some risks, such as different economic cycles between different countries or specific shocks in a single country, and demonstrating solidarity and having a stabilisation mechanism. However, most people are not ready for continuous transfers to countries in which no progress is taking place. The speaker’s nation would not exclude the possibility of an insurance system for unemployment situations or the stabilisation fund from discussion, but this can be discussed only if everybody takes responsibility and acts to reduce risk.
4.8. The white paper on the future of Europe published by the EU Commission is a good opportunity to discuss proposals to enhance EU economic policy governance and deepen the EMU.
A representative of a public authority observed that one of the main topics over the next half of 2017 will be the European Commission‘s initiative on the five scenarios (see annex). The speaker believes that it will take time to make decisions at the level of the Ecofin Council. This raises the question of how to proceed, and how ambitious to be. There will be very interesting discussions over the next half of the year during the Estonian Presidency of the EU Council.
Another public authority representative noted that Member States have always been in the same situation: they announce many things, but do not deliver results, and the latter is what is important. The same applies to the European Union: there are not five scenarios, but four, because doing nothing is no alternative.
A third public authority representative agreed with this. The five scenarios need to be discussed, but Europe needs to ‘do its homework’ first, and apply the rules. Continuing ‘business as usual’ – i.e. not applying all the rules – is not an option. The second scenario is being happy with the single market, which is clearly moving backwards, and this is therefore also not a solution. The third scenario is more enhanced cooperation, to enable those who want to do more to do more.
Scenario four is that whatever Europe does together at the present time, it should do more efficiently; this is not a concept that anyone can oppose, but a principle that should be applied to all of the other scenarios. The fifth scenario is the most ambitious: Europe doing much more together, changing the treaties in order to do so. The speaker does not think that this is a credible solution, as Europe has been built step by step, and forcing very ambitious change is going to lead to a loss of support. This is an issue of sequencing and timeline, and nobody should underestimate the impact that Brexit is going to have, as it relates to all of the strengths and weaknesses of Europe. It is to be hoped that the EU 27 will stick together to achieve a good result that does not punish the UK or disrupt the rest of Europe: there are contracts, obligations, and other aspects that will continue beyond 2019, and markets need to be given predictability and certainty if economies are to grow.
4.9. Europe needs to address the Non-Performing Loans issue
Answering a question from the audience, a public authority representative stated that there is no bank crisis; there is a crisis of profitability, and banks that do not have high enough profitability will not be shock resistant for the next crisis. Secondly, NPLs are not coming out of nowhere; in Italy, for example, NPLs have been built up over many years. Thirdly, there are clear EU rules to solve the problems: there is a directive for winding down failing banks, which was used for two banks in Austria. This was done very successfully, but it was a very complicated procedure, and is even more complicated in Italy.
Europe will need to work hard to address the issue of NPLs. When it began the process of convergence, the situation of the various Member States was very different, and the ECB has been helpful in this respect, as have the European Commission and ESM. Countries like Spain and Ireland that had problems following the crisis did a ‘perfect job’, and are now back on track. This is important: doing nothing will mean a return to the crisis, and it is not clear that governments in countries such as Portugal will stick to these rules. One country can affect all of the EU’s other countries; the spill over effects are very significant. As such, the speaker is glad that firewalls are now in place, because they make Europe much better prepared for a crisis than it was in 2008 or 2009.
There are also the questions of the banking systems within the member states, and of structural reforms. The issue is not only the pension system, the health system or the care system, but also how markets can be opened. Countries will need to reform their labour markets and their banking sectors; some countries have done this, others are doing this, and some have not started to do this. Different countries are in different situations, but all over Europe, NPL levels are too high.
White paper on the Future of Europe:
avenues for unity for the EU at 27
This White Paper published on 1 March 2017 is the European Commission ‘s response to the Rome Summit which took place on 25 March 2017 to mark the 60th anniversary of the EU. The document sets out five scenarios, each offering a glimpse into the potential state of the Union by 2025 depending on the choices Europe will make. The scenarios cover a range of possibilities and are illustrative in nature. They are neither mutually exclusive, nor exhaustive.
Scenario 1: Carrying On - The EU27 focuses on delivering its positive reform agenda in the spirit of the Commission's New Start for Europe from 2014 and of the Bratislava Declaration agreed by all 27 member states in 2016. By 2025 this could mean:
• Europeans can drive automated and connected cars but can encounter problems when crossing borders as some legal and technical obstacles persist.
• Europeans mostly travel across borders without having to stop for checks. Reinforced security controls mean having to arrive at airports and train stations well in advance of departure.
Scenario 2: Nothing but the Single Market – The EU27 is gradually re-centred on the single market as the 27 Member States are not able to find common ground on an increasing number of policy areas. By 2025 this could mean:
• Crossing borders for business or tourism becomes difficult due to regular checks. Finding a job abroad is harder and the transfer of pension rights to another country not guaranteed. Those falling ill abroad face expensive medical bills.
• Europeans are reluctant to use connected cars due to the absence of EU-wide rules and technical standards.
Scenario 3: Those Who Want More Do More – The EU27 proceeds as today but allows willing Member States to do more together in specific areas such as defence, internal security or social matters. One or several "coalitions of the willing" emerge. By 2025 this could mean that:
• 15 member states set up a police and magistrates corps to tackle cross-border criminal activities. Security information is immediately exchanged as national databases are fully interconnected.
• Connected cars are used widely in 12 Member States which have agreed to harmonise their liability rules and technical standards.
Scenario 4: Doing Less More Efficiently - The EU27 focuses on delivering more and faster in selected policy areas, while doing less where it is perceived not to have an added value. Attention and limited resources are focused on selected policy areas. By 2025 this could mean
• A European Telecoms Authority will have the power to free up frequencies for cross-border communication services, such as the ones used by connected cars. It will also protect the rights of mobile and Internet users wherever they are in the EU.
• A new European Counter-terrorism Agency helps to deter and prevent serious attacks through a systematic tracking and flagging of suspects.
Scenario 5: Doing Much More Together – Member States decide to share more power, resources and decision-making across the board. Decisions are agreed faster at European level and rapidly enforced. By 2025 this could mean:
• Europeans who want to complain about a proposed EU-funded wind turbine project in their local area cannot reach the responsible authority as they are told to contact the competent European authorities.
• Connected cars drive seamlessly across Europe as clear EU-wide rules exist. Drivers can rely on an EU agency to enforce the rules.