Economic Challenges Ahead for the Next European Commission

Clemens Fuest

No 62, EconPol Policy Brief from ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Abstract: The past few years have been marked by major crises, including the covid pandemic and the Russian attack on Ukraine. These crises have consequences. The new European Commission will need a well thought-out economic policy agenda to respond to the changed geopolitical challenges and to strengthen its competitiveness. This policy brief analyzes the main economic challenges faced by the EU: improving defense capabilities, overcoming international frictions, and refining its environmental and climate change policies. Key Messages Focusing on the “Green Deal” will not be enough in the upcoming legislative period. The new Commission will need a well-thought-out economic policy agenda to respond to the changed geopolitical challenges and to strengthen its competitiveness. The EU needs to improve its defense capabilities, overcome international trade frictions, and refine its environmental and climate change policies. The EU needs clear policy intervention criteria to deal with supply risks and deepen trade relations with third countries. Policy must be upfront regarding the fact that the high levels of investment required for decarbonizing the economy will not be accompanied by an economic boom. The European single market could play a central role in strengthening the EU’s economic power and competitiveness—if it is deepened further.

Date: 2024
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