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 / Autumn 2012 / Issue 68(originally published by Booz & Company)


The Business Case for the European Union

To corporate leaders, this year’s economic crisis is a sign that a more unified Europe is a solution, not a problem.

As the State of the European Union conference convened in Brussels in May 2012, the economic news was grim. An electoral crisis in Greece, a banking crisis in Spain and Portugal, and a bitterly fought election in France had all taken place within the previous few weeks. Unemployment was rising in many countries from already high levels. And there was a flood of public commentary about European economic problems — bemoaning the future of the euro, anticipating the loss of countries from the European Union, and predicting immense fallout in the form of further unemployment, defaults, and recession.

Given these conditions, one would naturally expect pessimism at the conference, but what we heard instead was reasoned optimism and a commitment to European unity. The 400 business leaders who came together were CEOs and other senior executives of major companies in a wide variety of industries. Most were European, but a sizable number came from North America and emerging economies like Brazil, Russia, India, and China. All were long-standing investors of money, attention, and effort in European customers and Europe’s future. Nearly all of them (as well as the 2,000 executives we surveyed before the conference) felt that there was far more to gain from bringing Europe closer together than from letting it fall further apart.

If these individuals are typical of their peers, then the desire of business leaders is simple and clear. They want more Europe, not less. They want more weight given to leadership at the European level, and stronger decision making in Brussels. They are even willing to play a role in helping the European Union survive. They see the E.U. as a solution, not a problem.

This vote of confidence comes from a business community that is usually eager for less government, and prone to complain about the excesses of regulation. The perspective is also at odds with the views of many national politicians, significant portions of the electorate, and much of the press. That’s why it is important to hear it. Despite the uncertainties, and the weakness that the crisis has exposed in the current design of the European Union, business leaders do not want the system to break apart, and they do not think fragmentation is inevitable.

Nor do they want stasis. They believe in making political and economic changes — to promote regional competitiveness, guarantee level playing fields, and build more centralized governance structures, including a supranational federal executive. If those changes, and others like them, can take place, Europe will have the capability to recover and thrive.

Crises tend to arise because important questions are not adequately addressed. Viewed in this way, the euro crisis is welcome. It is forcing leaders and citizens to look closely at reforms that have been held back or put off for years. Whatever one may think about the current difficulties, the goal of future efforts should be a stronger, more cohesive Europe — not a lesser, weaker one.

The Case for Optimism

In making the argument that the European Union and the euro will hold, business leaders reaffirmed the reason the E.U. was created in the first place. Formulated since its beginnings as a common market, the European project has been driven by the need to create a single economic entity — as the only way to survive in an increasingly competitive global business environment. Companies from the United States, the BRICS (Brazil, Russia, India, China, and South Africa), and other emerging economies, such as Indonesia, Mexico, and Turkey, are all competing globally and catering to customers around the world, including, of course, in Europe.

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