Insights Blog

G20 Features SCEPA Article on Climate

June 16, 2021

This year’s materials for the G20 Summit include a SCEPA research paper co-written by Willi Semmler, the Director of SCEPA’s Economics of Climate Change project. The paper investigates how to recover the European Union (EU)’s sense of common aims after the Covid-19 crisis to address challenges such as long-term scarring of the labor market, Climate Change, European social and health care system and sustainability of sovereign debt. 

The journal article, “European Economic, Fiscal, and Social Policy at the Crossroads” was published in Constellations and authored by Francesco Saraceno, Willi Semmler, and Brigitte Young. In order to ensure a progressive future of the union, the authors advocate for a shared policy agenda for recovery.

The finished report appears in materials distributed to all members of the  global G20 Summit as an overview on the current state of the European Union, its macroeconomic, social, fiscal and climate policy challenges and possible policy solutions to include in a stronger, more inclusive and resilient recovery from the Covid-19 crisis.

In the past, the union’s divergence between its core and periphery has created economic and political consequences caused by “a lethal mix of inadequate institutions and political choices dictated by flawed economic thinking,” the authors say. The EU’s unity not only acts as the core of its identity but also serves as the source for its economic and political viability. This unity cannot be trusted to blind faith in “efficient” markets, as some claim. Allowing this policy means to misguide the consolidation of the EU into a club where each member is self-interested and more concerned with its own traditional nationalist agenda, Semmler and his co-authors explain.

To ensure cohesion and progressive future of the union, the authors stress the need for institutional reform for macroeconomic governance (most notably fiscal policy) and to prioritize better social welfare measures for Europe. European economic, fiscal, and social policy must be handled in tandem to create a sustainable EU recovery from the pandemic-driven meltdown. They assert the EU must enact fiscal policies which protect against macroeconomic shocks and distributional problems while also creating and strengthening public welfare programs such as a shared health care policy, a better Social Security system, and a coordinated effective transition to climate-neutral society.