If we focus on the old economy, we risk sliding into irreversible societal decline. The powerful rise of digital solutions and global technology giants (Google, Apple, Facebook and Amazon, GAFA, in the US and Bytedance, Alibaba and Tencent, BAT, in China) points to the urgency, vigor and method by which Europe should react to this exceptional challenge.
Europe can reclaim its distinct societal model in the global digital economy. The ambitious budget proposal by the European Commission holds an obvious historic opportunity to do just that. For this, European leaders should use two formidable bottom-up levers available to them rather than a top-down project with every detail and protocol centrally specified.
First, there is the ever-stronger community of tech startups and growth enterprises across Europe. From Lisbon to Helsinki, they are ready to deliver the world class innovative solutions needed. But they need capital ready to shoulder the growth with them. If not, they will be acquired by global technology enterprises, taking the profit and returns outside Europe. Investing now in our best homegrown growth enterprises can level up our systems and services for health, elderly care, education, travel, tourism, leisure, transport, commerce, manufacturing and our planet and climate.
Our societies now need such innovation powered by smart technologies with fairness and privacy. This can restore the jobs and bring additional purpose as better services are delivered to citizens in Europe and exported internationally. Cross-border pooling of demand and supply in win-win partnerships of the enterprise, public, social and corporate sectors is furthermore smart. It would minimize state aid distortions, diminish fragmentation and strengthen the internal market.
Second, the investments needed across Europe can be led by our massive investment and financial sectors. Europe’s holds the highest savings and pensions base in the world. Liberating investment opportunities at European level would foster the savings and investment union as called for by Europe’s Ministers of Economy and Finance only last Autumn. The corporate pensions and savings can also be unlocked through corporate venture capital to commit to VC funds and invest directly in startups as a fuel to customer-supplier relationships and potential M&A.
Most importantly, such unionized investment approach can deliver attractive long term returns also to taxpayers who are now asked to come to the rescue of our economies. So, instead of asking how EU budgets can be repaid, we should aim for a high return. It is the right time to make these equity capital investments and ask for the due returns for the next generation.
The great news is that only a fraction of the EU grant recovery budgets would be needed. This EU investment capital would need to be pooled. Such union approach makes much more sense than the divisive fragmentation of budgets and investments. The already planned Invest EU scheme could leverage some ten times the guarantee. It could also transparently govern, control and monitor both EU and national grants offering further flexibility as needed. This can deliver the financial returns needed by future generations. It would offer the safest and shortest path to an equitable and sustainable economic recovery. We can fix our future now, if we are smart and pool our limited EU resources.
Signed
- Christian Motzfeldt – Chair of the Informal Group
- Alexander Banz, Alisee de Tonnac, Stefano Firpo, Sarah Fisher, Cristina Fonseca, Eeva Grannenfelt, Hermann Hauser, Petri Laine, Florian Lahnstein, Maxime Lingjaerde, Daniel Kubitza, Erika Mann, James Mawson, Kostadin Kostadinov, Julia Prats, Maurice van Tilburg, Jean-Emmanuel Vernay – Members of the Group
- William Stevens – Facilitator and Editor of the Group