EconPol Opinions

The ‘Green Deal’ in its objective is highly ambitious and will absorb substantive financial resources, and it is not surprising that the potential role of higher public debt is being discussed. The European Central Bank is increasingly requested to provide green finance through its asset purchase programmes and similar suggestions are being made in national debates. But does an ambitious climate policy really provide compelling arguments for higher public debt? Friedrich Heinemann (EconPol Europe, ZEW Mannheim) argues that fighting climate change is not a convincing justification to open new loopholes in European debt rules and fiscal or monetary institutions.

The uncertainty surrounding Brexit is costing the UK economy £16 billion per year, according to calculations from EconPol researcher Fabien Tripier (Professor of Economics at the Université Paris-Saclay and scientific advisor at the CEPII). The cost is based on the level of political uncertainty, the effect of that uncertainty on the economy, and the comparative trajectory in the absence of uncertainty.

China’s success with state capitalism poses security concerns and huge economic challenges for western market economies. Its economy has boomed over the past 20 years, with private industry contributing much to recent success. And while private industry has helped the rise of China, it’s only one part of the economy. State enterprises and state-controlled firms play a dominant role; the former accounts for 35% of China’s GDP. Amidst uncertainty over how the trade-off between private corporate dynamics and government management of firms will develop, Achim Wambach says Europe needs to work with China to create fair competition and avoid unilateral protectionism.

To prevent the average global temperature rising by more than 1.5° celsius, we need to reduce global net greenhouse gas (GHG) emissions to zero by 2050. The EU’s current target is a reduction of emissions by 80-95% by 2050. However, the EU itself estimates that it will only achieve about 60% with a continuation of current policies. In 2017, GHG emissions rose after falling by almost 23% between 1990 and 2016. Prof. Dr. Karen Pittel examines the evidence and suggests a framework for action.

The development and diffusion of new technologies scores high on the policy agenda of the European Union (EU) as well as its member states. The EU seeks to limit the technological gap towards other major economies. This manifests in the rapid growth of the digital economy that has evoked an intensified interests on the part of the EU and its member countries not only to foster technological innovations, but also to compete for innovative, internationally mobile firms.