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OPINION - BREXIT

EUROPEAN UNION

‘A united Europe benefits both Britain and Sweden’

Sweden's Foreign Minister Margot Wallström argues that a 'Remain' vote in the forthcoming British EU referendum would benefit both Britain and Sweden.

'A united Europe benefits both Britain and Sweden'
Margot Wallström calls for a united Europe. Photo: Marcus Ericsson/TT

The future of the EU is uncertain. This is apparent both from the referendum in the UK and the inability of EU member states to deal with the refugee crisis. But it would be wrong to talk about a divided Europe. Thanks to the EU, Europe is united. This has fostered peace, prosperity and solidarity between the 28 Member States. We must talk about a united Europe.

In times of crisis it is also important to remember the EU’s success stories. The EU is the world’s largest donor of aid, the world’s largest integrated economy and accounts for nearly a third of global trade. The EU’s consensus on sanctions against Russia, the EU’s role in the negotiations with Iran, and the EU’s commitment ahead of COP21 are good examples of successful joint action. Through cooperation at the EU level, we are taking joint responsibility for climate and environment issues. No single country in Europe can meet the challenges of a globalised world alone.

Having said that, we must have a dialogue among the member states about our common values. The refugee crisis has weakened the bonds uniting the EU. One effect of this is that it has become more difficult to assert universal values in other parts of the world. We must talk about these issues in the EU, even if we start out from different positions. It is up to us national politicians to take responsibility and to dare to stand up for the common decisions made in Brussels. We – not ‘they’ – are the EU.

Time and again, EU enlargement has proved the most important instrument for peace, growth and prosperity in Europe. The eastern enlargement of the EU in 2004 brought more than 500 million people into the EU’s internal market. This has tangible advantages in everyday life. It means that we citizens can live, travel, study, work, seek care and retire in any EU country we wish. The common market helps to create jobs and gives us an increased supply of goods and services at better prices. Right now, roaming charges are being phased out thanks to persevering efforts at EU level.

Free movement and common regulatory frameworks have enabled Swedish companies to grow beyond national borders. Over two thirds of Sweden’s trade today is with countries in the internal market. The economic benefits of the internal market are one of several strong reasons why we hope that the people of the UK will vote to stay in the EU. It is to the UK’s and the EU’s advantage alike. Moreover, we want to carry on working with the UK to make the EU a stronger foreign policy actor.

One important element is to strengthen the EU’s social dimension. With almost 25 million people in the EU unemployed, workers’ rights are under severe pressure. Now that Europe’s economies are slowly recovering from the crisis years, social cohesion and welfare must also be strengthened. We are pleased that the Commission has put this issue on the agenda and has asserted the principle of equal pay for equal work. Sweden’s leading role in these issues is confirmed by the appointment of our former Minister for Finance, Allan Larsson, as President Juncker’s Special Adviser for the European Pillar of Social Rights.

In a social Europe, growth and social progress are mutually reinforcing. Fair conditions and high employment rates are key to sustainable economic development in Europe. If women participated in the labour market to the same extent as men, the EU’s GDP could increase by 12 per cent by 2030. The social summit planned in Sweden in 2017 will provide vital impetus in driving these issues forward.

The development of Swedish welfare is intimately bound up with European integration. On our own, Sweden cannot solve the challenges of our time. Sweden will take a central and proactive part, together with our EU partners, in tackling the challenges we face. We need a strong, unified and cohesive Union.

This is a translation of an article written by Margot Wallström, Sweden’s Foreign Minister, which was first published by Göteborgs Posten.

ENERGY

How European countries are spending billions on easing energy crisis

European governments are announcing emergency measures on a near-weekly basis to protect households and businesses from the energy crisis stemming from Russia's war in Ukraine.

How European countries are spending billions on easing energy crisis

Hundreds of billions of euros and counting have been shelled out since Russia invaded its pro-EU neighbour in late February.

Governments have gone all out: from capping gas and electricity prices to rescuing struggling energy companies and providing direct aid to households to fill up their cars.

The public spending has continued, even though European Union countries had accumulated mountains of new debt to save their economies during the Covid pandemic in 2020.

But some leaders have taken pride at their use of the public purse to battle this new crisis, which has sent inflation soaring, raised the cost of living and sparked fears of recession.

After announcing €14billion in new measures last week, Italian Prime Minister Mario Draghi boasted the latest spending put Italy, “among the countries that have spent the most in Europe”.

The Bruegel institute, a Brussels-based think tank that is tracking energy crisis spending by EU governments, ranks Italy as the second-biggest spender in Europe, after Germany.

READ ALSO How EU countries aim to cut energy bills and avoid blackouts this winter

Rome has allocated €59.2billion since September 2021 to shield households and businesses from the rising energy prices, accounting for 3.3 percent of its gross domestic product.

Germany tops the list with €100.2billion, or 2.8 percent of its GDP, as the country was hit hard by its reliance on Russian gas supplies, which have dwindled in suspected retaliation over Western sanctions against Moscow for the war.

On Wednesday, Germany announced the nationalisation of troubled gas giant Uniper.

France, which shielded consumers from gas and electricity price rises early, ranks third with €53.6billion euros allocated so far, representing 2.2 percent of its GDP.

Spending to continue rising
EU countries have now put up €314billion so far since September 2021, according to Bruegel.

“This number is set to increase as energy prices remain elevated,” Simone Tagliapietra, a senior fellow at Bruegel, told AFP.

The energy bills of a typical European family could reach €500 per month early next year, compared to €160 in 2021, according to US investment bank Goldman Sachs.

The measures to help consumers have ranged from a special tax on excess profits in Italy, to the energy price freeze in France, and subsidies public transport in Germany.

But the spending follows a pandemic response that increased public debt, which in the first quarter accounted for 189 percent of Greece’s GDP, 153 percent in Italy, 127 percent in Portugal, 118 percent in Spain and 114 percent in France.

“Initially designed as a temporary response to what was supposed to be a temporary problem, these measures have ballooned and become structural,” Tagliapietra said.

“This is clearly not sustainable from a public finance perspective. It is important that governments make an effort to focus this action on the most vulnerable households and businesses as much as possible.”

Budget reform
The higher spending comes as borrowing costs are rising. The European Central Bank hiked its rate for the first time in more than a decade in July to combat runaway inflation, which has been fuelled by soaring energy prices.

The yield on 10-year French sovereign bonds reached an eight-year high of 2.5 percent on Tuesday, while Germany now pays 1.8 percent interest after boasting a negative rate at the start of the year.

The rate charged to Italy has quadrupled from one percent earlier this year to four percent now, reviving the spectre of the debt crisis that threatened the eurozone a decade ago.

“It is critical to avoid debt crises that could have large destabilising effects and put the EU itself at risk,” the International Monetary Fund warned in a recent blog calling for reforms to budget rules.

The EU has suspended until 2023 rules that limit the public deficit of countries to three percent of GDP and debt to 60 percent.

The European Commission plans to present next month proposals to reform the 27-nation bloc’s budget rules, which have been shattered by the crises.

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