@Bruegel: Structural reforms, the lessons from the crisis

We had a lively discussion yesterday at Bruegel. Check here my intervention and those of my fellow panellists, Paolo Manasse and Klaus Masuch.

I focused on three main ideas:

First, what do we mean by structural reforms? Increasing potential growth does not necessarily mean shared prosperity. A discussion on what is our normative goal must be the very first step.

Second, action at the national level – surely needed – must go hand-in-hand with action at EU level. Risk sharing is a complement to risk mitigation. I gave two examples where urgent action is needed. The creation of a euro adjustment mechanism to deal with asymmetric shocks, even more relevant as deep crisis leave scars that curb future growth; and taxation, in particular addressing tax competition among EU countries, which is undermining our collective ability to promote shared prosperity.

Third, at the national level, I stressed two lessons from the crisis. One on ownership. Promoting a reform agenda using EU institutions as a scapegoat – thus circumventing national democratic processes that would lead to political consensus – endangers the EU project itself. The other on prioritization. Given that administrative capacity and political capital are limited, we must focus on a few priorities. Getting them right is essential for the success of the reform agenda.