How do I become more competitive
"We have to become more competitive"
DW: How do you assess the economic situation in the European Union?
Jyrki Katainen: The economy is growing. However, the two percent growth that we expect next year is not enough. Even if the European economy is suffering from external shocks from the US or China and global uncertainties, we should not ignore our internal weaknesses. The main problem for Europe, its weak point, so to speak, are outdated structures. The problems in the countries are different. For example, in some countries the labor market needs to be reformed, in others the energy sector needs to be rebuilt in order to lower energy prices. And in other countries, the judicial system has to be renewed in order to shorten the legal process.
Europe is in the middle of a process of restructuring and we need to press ahead with structural reforms at national level in order to improve competitiveness. Europe has a lot to offer. The population is very well educated, there are good universities, we have an efficient manufacturing industry in many areas of the economy. In order to derive the greatest possible benefit from this, we must increase our competitiveness vis-à-vis non-European countries.
How uniform is the economy of the European Union? Isn't it rather that the member states of the EU are very different and that that is an essential part of the problem?
The European countries may have different structures, but due to their close interdependence they influence the European economy as a whole. It is therefore important that the rules of the eurozone are respected and that everyone does their homework. Since my actions can have a major impact on the daily life of my neighboring country, I have a responsibility to my voters and also to all Europeans. That is why we have to harmonize the European economy.
A referendum on EU membership is due in Great Britain. If it comes to a Brexit, i.e. if Great Britain leaves the EU - what would the consequences be?
Nobody knows right now. If the voters vote "No", that is a leap into the unknown. But if I think objectively about a Brexit, I expect negative consequences. There is nothing positive to expect.
Does the European Union have a plan on how to deal with Brexit?
No. We have helped member countries reach agreements with Great Britain. Now we can only see what happens next. It is up to the British voters to decide whether or not they want to be part of the EU in the future.
Are you worried?
Yes, to a certain extent. Whenever you don't know what's going to happen next, that's a cause for concern. There will always be room for Britain in the EU and I believe that both Britain and the EU will be better off if they stick together and if they reform the member states and the EU as a whole together.
Let's talk about the euro zone: The European Central Bank (ECB) seems to have run out of ammunition. What can Europe and the Eurozone do to stimulate the economy again?
I do not believe that the ECB has run out of ammunition, rather it is ensuring stability in the euro area. If it were to change its policy, it would have a significant impact on the growth and economic situation of many euro countries. Perhaps the expectations of the ECB's ability to influence were exaggerated.
I believe that as long as the competitiveness of many member states in relation to non-EU countries is so weak, the ECB cannot do much more. I agree with ECB boss Mario Draghi on this. He said that the ECB had done its part and that now the governments of the member countries must also do their part by introducing structural reforms and pursuing "healthy" fiscal policies.
Some economists speak of the "new normal", which consists of lower growth and lower productivity than we were used to. What do you make of it?
I don't believe in such a "new normal" - that's just a description of the current situation. But there are also factors, such as digitization, that have the potential to increase productivity enormously if governments take the right measures. Likewise, new technologies in health care or in the area of social systems can increase productivity in the public sector. New business models, for example in the area of "share economy", can trigger a new wave of growth.
A "new normal" with low productivity and moderate growth, on the other hand, would mean that our investments in research and development would not generate any progress and that digitization would not bring about any major productivity gains. I don't believe in that. It depends on how you do things. Nothing just happens, you have to reform society so that you get the most out of your assets.
But doesn't that take too long?
It takes time. Nothing will change overnight.
Jyrki Katainen is Vice President of the European Commission responsible for jobs, growth, investment and competitiveness. From 2011 to 2014 he was Prime Minister in Finland. The interview was conducted by Manuela Kasper-Claridge during the annual Ambrosetti Forum in Italy.
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