Brexit Institute News

Brexit and the Future of Europe

by Ana Fontoura Gouveia*

In 2016, some would claim that the European Union was doomed. The UK vote for Brexit was seen as the trigger for others to follow, in particular those where national elections were due to be held and where anti-EU populists were perceived to be gaining ground.

Reality proved them wrong.

In fact, Brexit may have “sparked off more positive feelings about the EU”. The share of those approving their country’s membership in the EU – which is in any case high – increased by five percentage points between March and August 2016 (before and after the UK referendum) and support for the euro is now at a record high. You could argue that even the UK is having second thoughts, with increased support for Europe. Weren’t the June UK elections really about Brexit?

Concerning populism, “elections did not translate into outright populist wins”. Still, it is undeniable that the influence of populist parties increased in some countries and, even if not winning elections, they impact politics by leading to lengthier processes, by changing the debate style and content and by reducing the scope for reform.

Where to go from here?

It is clear that the EU needs reforms. But while it is true that citizens are not happy with the current policy direction, it is also true that they have very different views on the way forward.To solve this, information is paramount. Europeans are not informed about the EU and several studies show that turning that around is an essential step to build consensus (see here or here).

Another critical point is ownership. The perceived divide between EU and national interests, even conveyed by national politicians, only fosters distrust and harms any further progress. But national ownership also depends on the ability of EU countries to agree on the appropriate balance between risk-sharing and risk-reduction, devising the adequate mechanisms to ensure that Europe delivers on the promises of shared prosperity and stability for all of its members. Also, it must be acknowledged that the desired convergence regarding institutional quality does not mean a convergence of institutions, as these are legitimate normative choices of the different countries.

Finally, social issues must be at the heart of EU policies. Unemployment is a major concern for European citizens as is migration. Support for populist parties and the fear of globalisation are linked to lower support for Europe. To address this, one has to look into the roots of the problem. Globalization is not working for all and only targeted action can support those left behind. Borrowing the words of the OECD Secretary-General, Mr Angel Gurría, “We should look at inclusiveness in an ex-ante way, not think first about maximising output and then consider whether and how to redistribute that output ex-post to mitigate inequality”.

*Ana Fontoura Gouveia is Head of the Economic Analysis, Research and Forecasting Department at the Portuguese Ministry of Finance and Visiting Professor at Nova School of Business and Economics, although here she writes in a personal capacity.  This is a condensed version of her remarks made on 14 September, 2017, at the Opening Event of the DCU Brexit Institute.  An extended version of this work will soon be published in the book “Challenges and Opportunities for the Eurozone Governance”.

 

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