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What is the state of the European Union?

17 September: European Commission President Ursula von der Leyen used her first set-piece ‘State of the European Union’ speech yesterday to outline her vision for the coming years and make several ambitious policy announcements. Susanna Di Feliciantonio, ICAEW Head of European Affairs, reviews the key points.

Presenting the EU as “a Union of vitality in a world of fragility”, von der Leyen opened her hour-long address to MEPs in Brussels by paying tribute to Europe’s frontline workers. She made clear her view that climate change and COVID-19 have laid bare the “limits of a model that values wealth above wellbeing”. Her speech set out a long list of commitments aimed at putting Europe back on its feet while designing a better way of living in the future.

‘Protecting lives and livelihoods’ – Noting that the coronavirus pandemic shows no signs of abating, von der Leyen expressed a commitment to significantly enhancing the EU’s competences for health policies. Emphatically stating that ‘work no longer pays’ for too many, she announced that a proposal for minimum wages across the EU, either through collective bargaining or legal floors, will be tabled by the Commission.

‘Not the time to withdraw support’ – Referencing the unprecedented action taken to deal with the economic fallout of the pandemic by all EU institutions, including the agreement on common European tools to complement national fiscal stabilisers, von der Leyen was clear that there should be no immediate change of course when it comes to supporting the economy. But she also stressed the need for further structural reform, including completion of the Capital Markets Union and the Banking Union.

‘Let’s give the Single Market a boost’ – Calling for a rapid restoration of free movement across the EU, von der Leyen reiterated the need to also remove the remaining barriers to business in the Single Market while also stepping up implementation and enforcement of existing rules. The bloc’s industry strategy – only presented in March this year – will be updated, as will the EU’s competition rules.

‘We need to go faster on climate action’ – As expected, von der Leyen doubled down on green commitments and proposed to increase the 2030 target for emission reduction from 40 to 55% (on a 1990 baseline). Calling on others to follow Europe’s lead, she committed to supporting countries and regions in making the transition. Being ‘fit for 55’ will require changes to the way Europeans “produce and consume, live and work, eat and heat, travel and transport”, necessitating a review of a vast swathe of EU legislation. Over a third of the EU’s €750bn recovery fund will be spent directly on green objectives – and 30% of the funds will be raised through green bonds. This also requires that ‘carbon has a price’, including at the EU’s frontiers through a carbon border adjustment mechanism.

‘Europe must lead the way on digital’ – Or it will have to follow standards set by others, according to von der Leyen. Areas of focus will include industrial data, through the development of common data spaces and a European cloud, the rules around AI and investing in infrastructure. The Commission will also propose a European e-identity for citizens to use anywhere in Europe to interact with public administrations and to engage in online commerce. And should OECD digital tax talks fail, draft EU legislation will be published early in 2021.

‘Partnerships built on trust’ – Quoting Margaret Thatcher, von der Leyen, also referenced relations with the UK and the ongoing talks on a trade deal. She called for a revitalisation of ties with both London and Washington and for the need to work together to reform multilateral organisations such as the WTO and WHO. In her remarks, she also painted China as “a negotiating partner, an economic competitor and a systemic rival”, warned against closer ties with Russia and called on Turkey to de-escalate in the Eastern Mediterranean. The Commission will come forward with a European Magnitsky Act and take action to deal with the sale of golden passports.

‘Difference is the essence of humanity’ – Quoting the late John Hume, in some of the most forceful passages of her speech, von der Leyen directly tackled the need to fight racism and discrimination. “Hate is hate”, she said, and the list of EU crimes should be extended to cover all forms of hate crime and hate speech. Pledging better use of funds and tougher enforcement, von der Leyen called for a “truly anti-racist” EU and pledged to present a strategy to strengthen LGBTQI rights. 

‘Overcoming differences that have held Europe back’ – Addressing sometimes significant disagreements between countries, von der Leyen also called on EU governments to step up alongside the Commission on migration based on a new “Pact” due out next week. On the rule of law, the Commission will issue the first annual report assessing the state of the rule of law in all EU countries, with the hope that it will help prevent “backsliding”. 

In their responses, the main political groups in the European Parliament backed the main points in von der Leyen’s address – as did the German EU Presidency. The Commission will follow up with a more detailed presentation of legislative and non-legislative initiatives in its 2021 work programme next month. 

Commission President von der Leyen’s speech is available here.

Further information

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