Preparedness, Investment and Industrial Policy in Times of Political Upheaval: Progressive Economics Network Meeting in Berlin

After years of crises, what measures are needed to prepare for inflations in the future? What should be the objectives of industrial policy for the EU? And in which sectors can investments be expected under the new EU Commission and the incoming Trump administration?

As the new European Commission is taking charge, the Progressive Economics Network (PEN) reconvened in Berlin and online on 21 and 22 November 2024 to discuss current challenges and help guide the development of policy responses strengthening economic resilience, industrial policy and competitiveness as well as public investments in the green transition. PEN is a joint initiative by the Foundation for European Progressive Studies (FEPS), Friedrich-Ebert-Stiftung and Das Progressive Zentrum.

Europe’s economy is facing a series of economic challenges stifling growth, productivity and innovation. The picture across the board is mixed when it comes to economic output. The conventional wisdom that the economic heavyweights, including Germany, pull ahead does not hold at the moment. On top of this, the result of the US elections brings additional uncertainty to international relations, both on economic and security dimensions.

In these times, speaking with one voice while also addressing current challenges in a targeted manner is more important than ever for progressives in power. But there is much to build on. Europe stood together in dealing with the immediate economic and social damage brought about by the pandemic, and transatlantic unity has seen a remarkable revival in the West’s resolute response to Russia’s unprovoked war of aggression. 

To bring policymakers and leading economic advisers and researchers together, the Progressive Economics Network hosted a two-day event in Berlin and online on 21–22 November 2024. The meeting consisted of three main sessions taking place at the FES Berlin Office, the German Chancellery, and the DPZ Office. This event was held upon invitation only.

Lessons Learnt from the Crises: Building up Shock Preparedness and Resilience

Even though the inflation crisis looks to be over, there was very little learning and policy adjustment in its aftermath. Apart from the reform of the European electricity market, there was very little done that would prevent or mitigate an inflation shock in the future. Instruments to address supply-side shocks remain limited and vulnerabilities in different markets remain. Against this background, Isabella Weber, Associate Professor of Economics at the University of Massachusetts Amherst, held a presentation on why we need economic disaster preparedness, especially with regard to the impact of inflation on social cohesion and the climate crisis. According to Weber, only a few sectors would be systemically significant related to inflation based on either external shocks like the Russian war on Ukraine or the COVID-19 pandemic (‘shockflation’) or rising prices due to the EU’s stricter CO2 pricing policy (‘carbonflation’). An economic disaster preparedness strategy was particularly important in the energy sector (oil and gas, coke and petroleum products as well as electricity and heating), for food and beverages, real estate services and land transportation.

Comments were made by: 

  • Zoltán Vajda, Member of the Hungarian Parliament for the Hungarian Socialist Party (MSZP) and Professor of Economics at the International Business School (IBS),
  • Anna Kolesnichenko, FEPS Analyst on Economic Policy,
  • Thomas Rabensteiner, Lecturer in Economics at the University of Greenwich (online).

A Progressive Vision for Industrial Policy and Competitiveness

As the new European Commission is taking shape, competitiveness and industrial policy will be its top priorities. As Francesca Bria, Mercator Stiftung Fellow on Governing Digitization in Public Interest and Honorary Professor at the UCL Institute for Innovation and Public Purpose pointed out, the EU’s strategic autonomy is linked to the innovation gap in the member states and therefore requires a bold industrial strategy that integrates the digital and green transitions in order to secure the EU’s industrial and technological sovereignty. 

Read Francesca Bria’s full opening speech of the session at the Federal Chancellery here.

Comments highlighting the need for a more integrated European single market and a common European industrial policy to be able to compete with US and Chinese markets were made by: 

  • Holger Fabig, Director General for Economic, Fiscal and Climate Policy at the German Federal Chancellery, 
  • Liam Byrne, Member of the UK Parliament for the Labour Party and Chair of the Business and Trade Committee (online), 
  • Jonás Fernández, Member of the European Parliament and S&D Coordinator for the ECON Committee (online),
  • Maria João Rodrigues, FEPS President and Chair of the Financial and Economic Network of the Party of European Socialists.

EU Investment Capacities: Navigating the New Mandate

At the start of this new legislative period, the EU’s finances are at a crossroad. On the one hand, the significant investment gap is obvious: The Draghi report quantified EU investment needs with 800bn annually for the EU to be able to compete globally. At the same time, private investments remain muted compared to other world regions and EU member states have dived into fiscal consolidation after spending big during the health and energy crises and the budget rules being back into force. Progressives pressured von der Leyen that the EU Competitiveness Fund will be a central project of the new Commission. It aims at raising EU investments in key strategic sectors with clear EU added value. Going forward, the political objective is that new funds will come quickly, be ambitious enough and address the right challenges. Social conditionalities ensuring positive net employment creation and quality jobs in EU funding instruments will be key of a progressive agenda of EU investment capacities.

In this last session, Thomas Dermine, State Secretary for Economic Resilience and Strategic Investments in Belgium, Dominika Biegon, Head of Unit for European and international economic policy at the German Trade Union Confederation and Member of the Economic and Social Committee and Cédric Koch, Policy Advisor for European and International Economic Policy at the Friedrich-Ebert-Stiftung, emphasised the need to reform the Multiannual Financial Framework of the European Commission, including more EU own resources and making investments in infrastructure a priority. 

The presentations were commented by:

  • Ole Funke, Deputy Director General European Policy at the German Federal Chancellery,
  • Paolo Pasimeni, Senior Associate Researcher for the Brussels School of Governance at the Vrije Universiteit Brussel (VUB).

About the project 

The Progressive Economics Network (PEN) is a joint initiative of the Foundation for European Progressive Studies (FEPS), the Friedrich-Ebert-Stiftung (FES) and Das Progressive Zentrum (DPZ) to advance the discussion of key economic issues by bringing together leading economic advisers, researchers, and decision-makers for open, frank, and private exchanges. The aim is to facilitate the brainstorming of innovative policy proposals on current economic challenges, with a focus on shaping progressive solutions.

Co-Hosts of the Progressive Economics Network

Authors

Florian Ranft

Mitglied der Geschäftsleitung und Leiter | Green New Deal
Florian Ranft ist Mitglied der Geschäftsleitung und verantwortet den Schwerpunkt „Green New Deal“ des Progressiven Zentrums.

Rachel Stieb

Junior Projektmanagerin
Rachel arbeitet als Junior Projektmanagerin im Bereich Green New Deal an den internationalen Projekten des Progressiven Zentrums. Im Fokus stehen dabei das “Progressive Governance Seminar“ und das Projekt „Transatlantic Dialogue on the Industrial Heartlands”, die ihr Interesse an internationalen Beziehungen und Europapolitik, insbesondere im Hinblick auf nachhaltige Entwicklung und Demokratiestärkung, widerspiegeln.

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