EU and sustainable economy

“People’s Europe” seminar Helsinki

Poul Nyrup Rasmussen

Financial bubble vs. real economy

Financial MarketGreed

Greenspan

Real peopleReal jobs

Real economyReal life

People first

EU-Council (Dec. 08): 2008 growth scenario and fiscal stimulus0.2% decline expected for 2009 → Necessary stimulus 1.2 % GDP

(170/30 bn. €)February 2009: Economic reality in the EU

Facts – real economy 2009: It’s getting worse…

Germany -5.4 %Spain -3.2 % UK -3.8 %

Sweden -4.0 %Finland -4.7 %Denmark -3.3 %

It’s not enough !

Estonia -10.3 %Latvia -13.1 %Lituania -11.0 %

EU Total - 4.0 % GDPBaltic + Hungary + Ireland → Deep crisis

Facts – Risk EU: 27 million unemployed

The European Council 19th Mar. 09 ► it’s not enough = What now?

New stimulus packages ? Eurobonds? Stimulus from the US, China, Norway?

EU 1,0 % GDPUS 5.9 % GDPNorway 2,3 % GDPChina 8,0 % GDP

EU Prognosis 2009 : - 4 % GDP (all incl.)

The Finnish case

If Finland does not do more, it will face a dark future 4.7% GDP decline 2009 (compared to 4% for EU) In March 2008 6.5% unemployment – today 8.3%

unemployed, which is 222.000 people – in 2010 9.3%, 250.000 people

Economic output is 19.5% lower than 12 months before, in forest industry it fell by 35%

The government decided to increase taxes, killing off demand even more

IS THE GOVERNMENT DOING ENOUGH?

The Climate Change Threat

Climate change will affect growth

We need capital markets to finance our investments

Investment needs: Green growth: 1 trillion

Lisbon: 1 trillion

Financial MarketsHFs & PEs

• Cost effective? • Transparent and accountable• Long-term financing?• Companies better off?• Respecting company values?• Social partners?

Not subordinated any longer

For a New Green Growth Strategy

Coordinated investments – more than 1 year.

A new progressive and balanced package:

• Green Growth • Social justice • Infrastructure

Intelligent work sharing (Active Labour Market Policy)

Education, education, education! knowledge economy

Support to energy saving, wind power, hydro power, bio fuels and geothermals

Special help to the Baltic countries + (Eurobonds)

Joint action means 1+1 = 3

7 steps in 100 days…

• A new, strong recovery plan for Europe, with coordinated investments in jobs and green growth.

• A European Employment Pact to safeguard employment, create new and better jobs, fight mass unemployment, and strengthen workers’ rights, working conditions and equal pay.

• A new Women’s Rights Charter to improve women’s right and opportunities.

• A Social Progress Pact to tackle the full social consequences of the crisis, preventing a rise in poverty, inequality and exclusion.

• Effective regulation and supervision of the financial markets, covering all financial actors and instruments, including hedge funds and private equity.

• New mutual solidarity across European member states – between East and West, North and South – ensuring a common roadmap out of the crisis.

• An urgent, common European roadmap for a global new deal, to be agreed at the G20 before the end of 2009.

Employment

Source: Calculation by ECLM based on the international model "HEIMDAL“

Unemployment

Source: Calculation by ECLM based on the international model "HEIMDAL“

Public budgets

Source: Calculation by ECLM based on the international model "HEIMDAL“

Lets turn the crises to a new direction for Europe

• Let‘s learn from the faults of Thatcher and Reagan and lauch a Renaissance of the welfare state

• Neoliberal Globalisation:• Inequality • Instability • Unsustainability

• Progressive Globalisation• Equality • Stability • Sustainability

• We must work smarter not harder• We must include people and not exclude them• We need a strong state, regulating the market,

making investments and educating our people for the future

• Greedy capitalism does not work, it has brought us the crises, it cannot be the solution

Is Finland just a copy?

What has happened to Finnish originality?

The Finnish Government is following traditional conservative policy, pulling Finland deeper into the crises

Finland should return to its social democratic roots

A modern and innovative welfare society:

• Green • Inclusive • Fair

Kalevi Sorsa: father of the Finnish welfare state

Jutta Urpilainen: mother of a renewed, stronger, innovative welfare state

And after all…

”Let’s not give up the hope, that problems created by human beings, can also be

solved by human beings”

Willy Brandt