The upcoming elections to the European Parliament will indirectly affect the appointment of a new Commission President. Euronews asks whether Ursula von der Leyen is up to the job and what challenges she still has to face.
After five years in office, German politician Ursula von der Leyen is once again putting her candidacy to a vote, hoping to remain at the helm of the EU executive. Given the broader context of her tenure, von der Leyen ends this phase with an important legacy.
Few Commission leaders have faced so many challenges, notably COVID-19, the Ukrainian military conflict in the heart of Europe and the subsequent unprecedented spike in inflation.
While monetary policy is regulated by the European Central Bank, the Commission is involved in economic affairs, shaping policies to stimulate growth.
Growth, that holy grail that is essential to maintaining a good standard of living, is currently stagnating in the EU. Von der Leyen’s supporters point to a significant amount of bad luck. Critics will say bad management hasn’t helped, Euronews reports.
In her annual speech to the European Parliament last year, the current Commission president touted her pro-growth victories in an attempt to win support from her centre-right European People’s Party.
More than six months on, the EU is on the cusp of a new political era. Euronews analyses some of the key economic moments of von der Leyen’s presidency.
One of the Commission’s most significant financial initiatives in recent years has been the NextGenerationEU programme, also known as NGEU. EU countries agreed to pool funds in an attempt to revitalise Europe’s pandemic-stricken economy, hoping to avoid a repeat of the euro crisis seen 10 years ago.
Member states with the greatest economic needs, such as Croatia or Greece, received the most aid. In a show of solidarity, richer countries such as Denmark or Ireland received less. The success of the stimulus package worth around 832 billion euros is still being evaluated.
Although the NGEU started in 2021, member states have to submit spending proposals to unlock the funds and this provision has delayed the allocation of resources. The deadline for spending the stimulus funds is 2026, which some believe is too tight a limit. They believe that some infrastructure projects, such as improving transport systems and infrastructure, cannot be realised overnight, according to Euronews.
Critics also believe that the scope of the one-off incentive is limited when creating services that require permanent staff, such as childcare assistance. Nevertheless, despite its shortcomings and later timing than the US incentives, the NGEU has been fruitful. Along with the efforts of the European Central Bank, the launch of the fund helped calm frenzied markets in the midst of the pandemic. EU economy commissioner Paolo Gentiloni said last month:
NextGenerationEU has played a key role in the preservation of public investment, a development that stands in stark contrast to the disastrous experience of the post-financial crisis years, when public investment collapsed. Based on our Autumn Forecast, the EU’s public investment ratio is expected to rise to 3.5% of GDP in 2025, up from 3.0% in 2019. And around half of that increase is related to EU funding.
Up to 30 per cent of the NextGenerationEU package will be financed with green bonds, meaning they will only be used to finance environmentally friendly projects. The initiative comes under the arch of the bloc’s broader environmental strategy, the EU’s Green Deal. Adopted in 2020, the Green Deal sets out Europe’s commitment to become climate neutral by 2050, with significant implications for the economy.
Massive job losses are expected as the EU changes the way it produces and consumes goods, and recent protests by farmers across Europe are a prime example of the real concerns associated with the Green Deal. Farmers argue that the EU’s environmental demands are too high for them to make an honest living.
In the long term, the Commission believes that the Green Deal will still have a positive impact, increasing the EU’s competitiveness by creating jobs in environmentally friendly industries, Euronews reports.
Luis Cano, spokesman for the ALDE party and the Renew Europe Now campaign, told Euronews that von der Leyen had failed to turn environmental strategies into growth strategies – despite the success of her pandemic relief fund. He said:
For ALDE, achieving the Single Market is a priority in order to deliver on the Green Deal objective of sustainable growth for companies and citizens. For five years, the Single Market was neglected by allowing too many fragmentations, from lavish subsidies given to large national companies to a failure of delivering the Capital Market Union.
Launched in 2014, the Capital Market Union is designed to facilitate the flow of funds between EU member states. In theory, this could accelerate the realisation of the EU’s climate ambitions by facilitating cross-border business investment. In practice, however, national market barriers still block progress.
Europe’s attempt to decarbonise its economy also depends on global politics and its own penchant for protectionism. The bloc has recently been flooded with cheap green technology from China, which holds the palm of superiority in the production of solar panels and electric batteries.
While these imports are a key element of Europe’s transition, there are fears they will affect EU jobs, not to mention the bloc’s political sustainability.
Improving energy security was a key point for climate sceptics of the Green Deal. Europe had planned to reduce its dependence on Russian gas by increasing domestic energy consumption. Now the idea that China could ration green technology and therefore force Europe to pay a ransom looks far from attractive.
When it comes to protecting the EU market, von der Leyen is now talking tough in response to these concerns. Last year, the Commission launched an anti-subsidy investigation into Chinese electric cars and is not ruling out the possibility of imposing punitive tariffs.
Rebecca Christie, a senior researcher at the Bruegel think tank, argues that this would be unwise. She noted:
This is one area where I believe that what von der Leyen is doing and what she’s campaigning on are going to diverge a little bit. As a campaign question, she needs to show that she’s got a plan for China, that she’s guarding against perceptions of risk. From a practical standpoint … She may not actually want to call for more tariffs if she can avoid it. Because Europe needs to electrify, and the green transition needs to be affordable.
In terms of jobs, Bruegel experts also noted that abandoning China would lead to a slowdown in the adoption of technologies such as solar panels. This, in turn, will lead to the destruction of European jobs related to deployment. Another pressing problem for European businesses is the shortage of labour and skills,” Iratxe Garcia Perez, chairman of the S&D Group, said. She told Euronews:
Our approach is to invest in people through training, education and professional development. … Our group believes that the European economy will be more efficient and more competitive with a well-trained and fairly treated workforce.
The EU is currently suffering from a serious imbalance in the labour market. While some sectors have a surplus of skilled workers, other sectors are experiencing severe labour shortages.
According to the latest report from EURES, the European Employment Network, all 27 EU member states, as well as Norway and Switzerland, are facing labour shortages in the second and third quarters of 2022. Among the hardest hit sectors are software, healthcare, construction, engineering and crafts.
This trend, which will ultimately limit economic growth, will only worsen as Europe’s population ages. As the ratio of workers to retirees rises, businesses will find it increasingly difficult to find enough labour to meet consumer demands. One option, although it may not be a sustainable solution, is to increase the flow of migrants into Europe.
Karel Lannoo, director general of the CEPS think tank, told Euronews that von der Leyen has avoided fully addressing the issue because it is politically sensitive. He explained:
If you call for re-industrialisation, it calls for enormous immigration – because we know that there are huge shortages in the labour market. [The Commission] shouldn’t be afraid to say this in public.
In examining von der Leyen’s activities over the past five years, we could simply list her goals against her current achievements. However, in doing so, it is important not to oversimplify the complex mechanisms of the European system, according to Euronews.
Unlike the head of national government, who can implement policy more directly, the Commission’s role is to galvanise member states into action.
One of the challenges of the union is that meaningful action requires wide-ranging co-operation, something von der Leyen has managed to achieve at least in some cases during her tenure. Bruegel’s Rebecca Christie said:
She picks out a position ahead of the group and kind of plants a flagpole, and she waits to see if the group comes under it. If it doesn’t, she just picks up her flagpole and moves it to another place that may be adjacent or similar, but that is still ahead of where we started.
If von der Leyen remains in power for a second term, much will depend on the convictions of the new parliament and national leaders. A spokesperson from the EPP told Euronews:
Ursula von der Leyen has boldly navigated the European Union through two of the most significant crises in recent decades. In the upcoming legislative term, under von der Leyen’s leadership, we want to enhance Europe’s global economic competitiveness.
