FEBRUARY 19, 2024
Ursula von der Leyen, President of the European Commission.
She steered the continent through the pandemic. She has massively increased the powers of the European Commission. And she has led a response to the challenges of climate change, Russia’s invasion of Ukraine, and competition from China.
Ursula von der Leyen might well have convinced herself of the strength of her record when she launched her bid for five more years as President of the Commission on Monday. There’s a problem, however. She has been a disaster for the European economy. Over the last five years, she has launched a ruinously expensive round of borrowing as well as a green strategy that will de-industrialise the continent, all while imposing round after round of growth-destroying regulations. On Von der Leyen’s watch, the EU has fallen decisively behind the rest of the world – and there is little hope of it recovering during a second term.
In many ways, Von der Leyen has been the most significant EU Commission President since Jacques Delors, the father of the single currency and the single market, back in the 1980s. The comical Jacques Santer, another of her predecessors, left little mark. The same was true of José Manuel Barroso and Romano Prodi.
But over the last five years, Von Der Leyen has overseen the final departure of the UK from the bloc; taken control of healthcare policy during the pandemic; launched the EU’s first major round of borrowing; introduced a climate change strategy; and vastly increased the power of the Brussels machine over industrial policy. It is quite a list.
The trouble is that Von der Leyen has also been a disaster for Europe’s economy. Europe’s performance, just like that of the UK, had been slipping for a decade or more, but it was over the last five years that the gap with the United States, and China, became more and more painfully obvious. By the end of last year, US GDP was 8.2pc higher than its 2019 level. For the eurozone, output was only 3pc higher.
Major economies such as France, only up by 1.8pc over five years, and Germany, with just a 0.1pc increase, performed even more poorly. Sure, Europe was hit by the pandemic. But so was every other country in the world. The EU is now slipping back into recession as much of the rest of the world steams ahead.
Von der Leyen’s catastrophic mis-management of the Commission is one of the major reasons for that. There have been three big problems. First, she has massively increased the amount the Commission borrows, launching a 700 billion euro Covid Recovery Fund, and issuing its own bonds for the first time.
This was meant to mark the start of a fiscal union to match the EU’s monetary union, and finally rescue the economies of countries such as Italy, which received large chunks of the cash.
Three years later, it is clear that it has done nothing to accelerate growth, that huge amounts of money have been wasted on vanity projects, and that it has failed to drag Italy out of its near-permanent recession (it grew by just 0.6pc last year, with 0.7 per cent forecast for 2024). The borrowed money still has to be repaid somehow, but there is little to show for it.
Next, Von der Leyen launched a massively expensive “Green New Deal” that was designed to turn the continent into a global leader in combating climate change as well as make its industries far more competitive against their main rivals.
It included a carbon border tax that looked suspiciously like disguised protectionism, and vast subsidies to take a global lead in alternative energies.
And yet, the results have been dismal. Europe’s once world-beating auto industry is getting wiped out because it can’t compete with cheaper Chinese models, the continent is dependent on Chinese imports of equipment for wind and solar power, industry has been decimated by soaring costs, and it has been out-competed by better designed and bigger subsidies offered by President Biden in the US.
At the same time, the “farm to fork” strategy that Von der Leyen launched in 2020, restricting the use of pesticides along with dozens of environmental targets for agriculture, has proved ruinously expensive, triggering a wave of protests in France, Spain, and Germany, as furious farmers take to the streets.
Finally, all the extra powers the EU has accumulated for itself over the last five years have mainly been used to destroy innovation, and micro-manage the bloc’s way to economic irrelevance. The mandarins in Brussels boast about being a “regulatory superpower”, as if it were pen-pushers and law-makers instead of entrepreneurs and businesses that created new wealth.
Take Artificial Intelligence, the most exciting industry in the world right now, and one where Europe could be a world leader.
The absurdly cumbersome AI Act from the EU imposes huge costs that will crush start-ups and deter investment – even President Macron in France, hardly a free-marketeer, criticised it in public – killing off a new industry before it has even had a chance to establish itself. The result? China and the US will dominate the sector, and the EU, as in the rest of the tech industry, will be nowhere.
Just like the UK, the EU desperately needs to grow faster. It is falling behind in key industries, Europe’s welfare states are increasingly unaffordable, and its mountains of debt keep on growing. Its share of the global economy has fallen from around 30pc 20 years ago to 15pc now. But there is little chance of faster growth under five more years of Von der Leyen’s inept leadership. Instead it will simply decline into greater and greater irrelevance.
Courtesy: This Telegraph
