2024 is a key year for the West, and the considerable focus on the outcome of both the American and European elections is evidence of a paradigm shift. Globalization – the twentieth century’s latest, most extensive but also shortest-lived utopian dream – has led to a return to politics. With the rapid retrocession of the seemingly market-governed globalized world, countries have gone back to being economically, militarily and politically centralized as they confront the multiple crises underway.
International Monetary Fund warnings point to the risk of a decade of stagnation if globally coordinated growth policies are not put in place. Weighing heavily on the situation is the increasing detachment of finance from the real economy, with financial markets seeming not to be factoring in the major geopolitical crisis rattling Europe and the Mediterranean basin. Stock indexes are rising, stoking the risk of both overheating and of a concentration of investment flows towards the United States where stock performance is, for the most part, driven by the high-tech “magnificent seven”. Added to all this is the waning sustainability of sovereign debt, which it pivotal to both developed (G7) as well as developing economies.
The overall picture is one of a global economy led by an America capable of outpacing other developed economies. Indeed, Europe has not managed to become an adjunct engine and neither has China which, despite this year’s 4.7% growth, is still performing below expectations and facing some important adjustments. China’s challenge lies in growth that has gone from intensive to extensive, and is capable of being made sustainable only by rebalancing demand with supply – thereby ensuring better government/market equilibrium – and enhancing domestic demand.
In a world where the market seems no longer capable of achieving peace and prosperity on its own, Europe too must be concerned about its future. Contrary to what it once thought, the Union can no longer build solely on the single market or the banking union. The post-pandemic recovery policies and the issuance of common debt via the Next Gen EU have shifted the issue to the new political level of strategic autonomy – an undertaking that must begin with common defense policies.
Una strategia su cui l’UE è risultata carente. The European and overall global situation present a complex scenario for the Italian economy, whose many small and medium-sized enterprises are facing the challenges of the digital and ecological transitions and are in need of support to maintain competitiveness. Certainly, the data on exports – which, at over 660 billion euros land Italy among the world’s top 5 most active countries – are proof of the strength of the Made in Italy label. Yet, it is essential to make the transition from a product- to a process-economy, which presupposes the need for a Europe-wide industrial policy capable of regaining ground even as compared with its American partner. A strategy in which the EU has thus far been coming up short.
The need for a European industrial policy will have to be the centerpiece of the next continental legislature, starting with the urgent issues arising from the current geopolitical situation as well as eliminating obvious inconsistencies in approaches to the energy transition. Indeed, having failed to trigger one of the main drivers of continental growth – energy diversification – after suddenly finding itself forced to confront its dependence on Russian gas, Europe is now heading for a similar dependence on Chinese raw materials and technologies.
The upshot is that the Union must not apply the lessons learned from its errors and draft a common development strategy that is both ambitious and realistic in all major arenas, from political governance to defense and from environment to industry; on the other, show pragmatism and flexibility by adopting plans and strategies to confront the changing scenario through dialogue, with a view to harmonizing the structural approaches of its diverse member economies.
Italy, one of the primary recipients of the NextGenEU resources, is a fundamental interlocutor in this process. The country has worked and continues to work to link the PNRR to other development funds by adapting to a changing reality – not least in terms of the exponential rise in prices – and making sure that spending is capable of generating growth. The Italian plan’s success is key to optimizing the common debt instrument and extending it to other sectors. Only in this way will Europe be able to generate the resources and cohesion needed to truly accomplish strategic autonomy and ensure its future.