Economic reforms for the sustainable growth in the EU under regional and global change

Europe is facing many challenges that have economic and social roots. European Union is also the most globalized economy in terms of trade and capital. This brings challenges in the following areas:

1. Turbocapitalism of the XXI century is more absolute than in XX century. The gap between millionaires (capitalists) and rest of society is increasing.

2. The detachment of financial services from real economy, industry and non- financial services is observed. The international financial transfers represent 300 times world GDP. It means that we “trade” virtually the amount of USD 70 bln.

3. The states and central banks are forced to print millions of dollars and euro to ensure the stability of financial “bloodstream”. The euro zone was prepared properly in institutional aspect and now has to work on the banking and financial union.

4. EU budget is estimated to only 1% of the EU GDP. European Central Bank has to deal with 19 different public financial systems within unconventional monetary policy. Nobel winner Paul R. Krugman is right saying that “good times are ahead the euro”, but it requires solidarity in the process of fiscal policy unification in EU.

5. The regional differences in Europe are increasing. The cohesion policy needs not only higher financial injections from the common budget, but also better coordination (model of optimal cooperation). But the main differences are being observed in the area of employment rate. The unemployment rate rises in the South, but decreases in Germany or Austria.

6. The demography of EU is alarming. Europe is the only continent, where the number of residents is decreasing. In 2050 there be 10% less of us Europeans. 

7. In the area of energy safety Europe has to do its homework. There are no signs for common direct of thinking or projects in terms of renewable sources of energy.