Soccer reflects the world in many ways. For instance, in Europe, soccer is organized around various national leagues with different financial strengths. These leagues send their top teams to compete in the Champions League instead of forming transnational teams. This mirrors how the European Union operates, with each country striving to create strong “national champions” in various sectors, such as finance, energy, and telecommunications. This emphasis on national strength over transnational cooperation is due to a lack of mutual trust and diverging interests among EU countries.
Nearly two years ago, it was suggested that the EU needed a reset to adapt to a post-pandemic world. This reset would involve increasing investments in strategic sectors to enhance the scale and productivity of European companies and developing European public goods using Eurobonds to improve resilience. Reports by Letta and Draghi, along with Macron’s recent speech, support these ideas.
Letta’s report highlights barriers in the single market for finance, energy, and telecommunications, leading to internal protectionism and the growth of national conglomerates. Draghi’s report proposes measures to stimulate a “radical change” in the EU by supporting the scalability of European companies, increasing provision of European public goods, and mobilizing European savings. Macron’s speech echoes these sentiments, advocating for relaxed limits on company consolidation and fostering the single market in strategic sectors.
Despite these proposals, there is a trend towards national solutions within the EU, such as subsidies to local industries and the reinforcement of national champions. This is seen in areas like the banking union, where banks choose to merge at a national level rather than consolidate at the European level, limiting their global competitiveness. The lack of progress in the capital markets union also hinders European savers from investing in pan-European instruments.
The difference in stock market investment culture between Europe and the United States raises questions about the role of public investment in Europe. The persistence of tax competition strategies and diverse responses to EU-China relations further illustrate the fragmentation within the EU, weakening its economic position on the global stage.
European citizens must decide whether to prioritize national control with smaller companies or pursue European champions and public goods funded by Eurobonds for greater productivity growth. Similar to the choice between national leagues and a European Super League in soccer, this decision will shape Europe’s future in the 21st century.
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