Paolo Gentiloni meets Bocconi Students – An EU Economic Policy for the Next Generation: “The European Economy is at a crossroads.” 

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On Tuesday, February 8^th, 2022, Fondazione Achille e Giulia Boroli and Bocconi University hosted an exceptional event, featuring guest lecturer Mr. Paolo Gentiloni, former Prime Minister of Italy (2016 – 2018) and incumbent European Commissioner for Economy under President Von der Leyen. Entitled “An EU Economic Policy for the Next Generation”, this lecture was held in memory of Achille Boroli (1913 – 2011), one of the greatest Italian entrepreneurs in the publishing industry of the 20th century.

As one of the EU’s most influential agenda-setters, Commissioner Gentiloni’s speech and subsequent discussion with students addressed pertinent issues for our generation in the aftermath of the pandemic: confronted with two major obstacles, namely the digital revolution and climate change, the European Union finds itself at a turning point that will determine its future. For Mr. Gentiloni, this is where we, students of our generation, come into play.

Indeed, the event ended with the announcement of the three team projects that won this year’s CIVICA Capstone Project Competition. CIVICA – The European University of Social Sciences is an alliance of eight European higher education institutions. Amid the pandemic, it launched a competition within the first edition of the Graduate Multicampus Course “The Future of Europe” that consisted of projects connected to policy challenges of the European Union.

50% of the solution to our problems are already given

After brief opening remarks by our Rector Gianmario Verona and Andrea Boroli – Vice-President of the foundation –, Carlo Altomonte, who is Associate Professor of Economics of European Integration at Bocconi University, addressed the audience. Delighted that the evolution of the pandemic allowed crowded events to be hosted again, he contended that the European Union successfully surmounted many obstacles related to Covid-19, and that we should not take its various accomplishments – effectively procuring vaccines or preventing disastrous socio-economic upheaval – for granted. Indeed, this was an occasion to acknowledge how the strengthened institutional framework of the EU excelled in overcoming crises. Hence, Professor Altomonte claimed, “50% of the solutions to our problem” were already given in the face of both the digital and the climate transition.

“The European economy is at a crossroads.”

After Professor Altomonte’s introduction, Commissioner Gentiloni began his lecture, and did so with a diagnosis of the current state of the European Union’s economy: GDP has returned to pre-pandemic levels and unemployment is at its lowest level since the introduction of the single currency. Thus, Europe should be “proud” of its collective response to the pandemic.

However, the European Union is also confronted with pressing challenges, such as rising geopolitical tensions, climate change, and inflation, Mr. Gentiloni proceeded. Further, not all member states have closed the gap to the pre-pandemic levels. And broader questions remain yet to be answered, such as Europe’s position on the international landscape.

Mr. Gentiloni deduced from the present situation: “The European economy today is at a crossroads. […] So, the decisions we take in the coming months will determine which way Europe will go: if it turns back to the pre-pandemic days of low growth, social disparities, and environmental fragility; or if we can forge a new Europe, a post-pandemic future of durable, sustainable, and fair growth. I believe we can, and I believe we will choose the second option.” Three matters lie at the heart of this decisive moment, according to the Commissioner.

The EU’s last missing pillar

First, Mr. Gentiloni elaborated on NextGenerationEU, the EU’s comprehensive €750 billion economic recovery plan. A “Hamiltonian Moment” for Europe, quoting German chancellor Olaf Scholz, this recovery package was conceived to make Europe greener, digitalised, and inclusive. The revolutionary feature of it, according to the Commissioner, also resides in the extraordinary method of funding. For the first time, the European Commission issued common European bonds, raising funds on the financial markets, and allocating them to member states with national recovery plans, subject to close scrutiny by the EU – both in matters of budget allocation as well as climate protection. This unprecedented step, as Mr. Gentiloni asserted, was a testimony of European solidarity, a concrete example of the salience and necessity of European unity.

This decision, however, also paved the way to hoist the last missing pillar of the European Union: its fiscal capacity. Hinting at a fiscal union, Mr. Gentiloni expressed that the recent evolutions in this realm presented an opportunity for further integration.

Implications of taxation

Taxation, a tool that member states have hitherto “guarded closely”, is indeed a pertinent matter in this century, as he clarified in the second part of the lecture. Global players in the tech-industry have benefitted from the ongoing economic crisis and the shift towards a digitalised economy, and yet, their soaring profits are accompanied by rising socio-economic disparities. In this vein, Commissioner Gentiloni stressed, the Global Agreement on Corporate Taxation, establishing an international minimum effective tax rate of 15%, was a necessary decision. Taxing where profits are generated, rather than in so-called “tax-havens”, is the initiation of a “tax revolution” following years of comprehensive tax reductions for multinational enterprises and of fierce destructive tax competition. This agreement, a motion partly put forward by the EU, was therefore forged in an international spirit of compromise.  

Likewise, the European Carbon Border Adjustment Mechanism was also a necessary fiscal step to combat climate change. Taxing goods based on their carbon values, as the Commissioner explained, entails developing policy that prevents carbon leakage; that is, fuelling company relocation and carbon-intensive imports that undermine stringent environmental efforts by shifting emissions outside EU territory. Finding global solutions to climate change has put the EU in a leadership position, and thus, represents an “opportunity”.

Economic growth to restore debt sustainability

What makes taxation so relevant? For Commissioner Gentiloni, the adjustment of fiscal policy has become inevitable to undertake the necessary investments of “520 billion per year [until 2030] only for the green transition”. Investment-enhancing policy therefore entails revisiting the public debt thresholds, such as the Maastricht Criteria, rather than reviving austerity as in the previous crisis. Indeed, as Mr. Gentiloni claimed, reducing debt and increasing investments are not two irreconcilable proposals – they merely need a compromise. Growth is the best way of restoring debt sustainability, the Commissioner posited.

Europe is in a “momentum of change”, rethinking its growth model. This goes hand in glove with the notion of strategic autonomy, Mr. Gentiloni remarked, the very idea that Europe needs to assert itself in a new geopolitical arena. He stated that European leaders would meet in March 2022 to conceptualise a novel growth model that allowed Europe to build resilience in a multipolar international landscape, but also, that addressed the urgent matter of economic cohesion across Europe, to avoid that the past geographical economic divide re-emerges. At the Commission, policy of past crises seems to have been thoroughly re-evaluated.

Forging a European identity – “Europe needs a project of hope”

As for the notion of European solidarity and identity, Mr. Gentiloni claimed that there exists a “European demos”, as CIVICA demonstrated; that a European identity within the upcoming European generation has emerged, as exhibited during the pandemic. He added that Covid-19 had evoked a sense of community, translating into the notion that while “we are free”, “we are not alone”. In the spirit of the European Year of Youth 2022, established by the Commission, Mr. Gentiloni concluded his lecture by appealing to the young to assume responsibility, quoting the recently deceased President of the European Parliament David Sassoli: “Europe needs a new project of hope”.

Students meet Paolo Gentiloni

The following Q&A started off with a question by Hanna, Vice-President of Bocconi’s student association European Generation, asking about the impact of the pandemic on European integration. Along with many other dimensions of the latter, for the Commissioner, Covid-19 was also a “chance” to deepen integration in a novel field of competence, namely, the health care sector. From vaccine procurement to health care certificates for over 600 million people, the EU had seized this opportunity of integration. He elaborated that, consequently, anti-European sentiment and Eurosceptic narratives were discredited as the EU rose to its responsibilities, as proved with functioning welfare states, for instance.

Subsequent questions from the audience pertained to international issues, such as inflation and soaring energy prices; gas prices are now seven times as high as they were a year ago, Mr. Gentiloni remarked. He also reiterated the Commission’s stance on nuclear energy, arguing that it will merely be a transitory means, but “not the solution”. Finally, Paolo Gentiloni recognised that the obstacles related to unanimous decision-making procedures in the EU’s institutional architecture has many implications. For Mr. Gentiloni, constraints to empowering the EU are even more salient in current matters of foreign policy, referring to the imminent threats to peace in Ukraine. With regard to the Conference on the Future of Europe, he stated that he hoped the European youth would send a clear message to the EU in this context.

The Boroli Award Ceremony

This fruitful discourse was followed by the Boroli Award ceremony of the CIVICA Capstone Project Competition, held by Antonella Carù, Dean of the Bocconi Graduate School and Stefano Caselli, Dean for International Affairs. The projects “Promoting EU’s Data Privacy Norms to the USA: Diversifying the Interlocutors”, “Should the EU develop a common migration policy?”, and “European Carbon Pricing: a pathway to zero-net by 2050” were awarded a monetary prize which was funded by Fondazione Achille e Giulia Boroli. We particularly congratulate Vojtech Balon, Bianca Brunori, and Adam Nowakowski from Bocconi University for this outstanding achievement.

Finally, Gianmarco Ottaviano, Professor of Economics and Achille and Giulia Boroli Chair in European Studies at Bocconi University, concluded the event with an inspiring quote.