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EU integration is becoming more difficult

27.05.2019

Kiel Institute President Gabriel Felbermayr sees polarisation within the EU as a warning signal.

Comment by Prof. Gabriel Felbermayr, President, Kiel Institute for the World Economy (IfW Kiel) on the results of the European elections

"A landslide win of populists and EU critics, feared by some, has not taken place. But the gains of populists in some countries and the increasing polarisation in the EU make it difficult to find a constructive way forward. The results in France and Italy are particularly worrying in this respect. This also makes it more difficult to complete the single market and conclude trade agreements with other countries and regions. The EU single market is Europe’s most important asset in international negotiations. Open borders and open societies guarantee our prosperity. Many people seem to underestimate their importance. According to our current calculations, the single market brings prosperity gains of around 643 billion euros per year for all EU members, while the customs union, trade agreements, Schengen and the euro together provide a further 287 billion euros.

The election result increases the risks for a destabilisation within the EU and for diminished global bargaining strength. Uncertainty will grow in view of the international economic situation and the trade conflicts with the USA and China. Now the EU could also become a source of further uncertainty.

The strong performance of the Brexit party in the UK makes negotiations with the UK after the Prime Minister's resignation even more difficult. The risks for a No-Deal-Brexit have increased. Nevertheless, the EU should do everything it can to avert this and reach out the British with offers to negotiate.

However, pro-EU forces still have a majority in the EU Parliament. It is now urgent that the EU tackle a reform based on two principles: First, it should focus on projects with real European added value that must be felt in each individual country, allowing to some extent different integration models for individual countries. Secondly, the subsidiarity principle must be applied consistently. The more the EU regulates areas that are regulated just as well or better in the member states, the greater the risk that sober cost-benefit analysis turns out against Europe."

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