Where are the new sources of growth?

Romania and the UK find themselves in similar economic circumstances. We are emerging from the economic crisis, we have had to bear down hard on public spending, and we need to find new sources of growth to sustain our economies in the decade ahead.

This is true for many countries in Europe. And the need to find new sources of growth is urgent if we are not to fall behind the emerging economies of Asia and Latin America. In fact, on current growth trends there won’t be a single European country in the top ten economies in the world after 2050.

Last week Prime Minister David Cameron gave his answer to this challenge, urging all EU countries to choose growth and to embrace reforms to unlock Europe’s potential. Here’s three things we can do:

• Make it easier and cheaper to start a new business. New growth comes from new businesses, but the bureaucracy in Europe is a disincentive to small and medium-sized enterprises. That needs to change.
• Support innovation. We have plenty of young people with bright ideas. But we need to back those ideas with more venture capital and incentives. The irony is that while Europe leads the debate on climate change, China is the leading investor in new clean energy technology.
• Unleash the Single Market. This is Europe’s greatest success, but it doesn’t go far enough. We need to extend it to new sectors like services and energy. We need to enlarge it to include other countries, and have more free trade with the rest of the world. The best way for EU countries to grow is to stimulate trade – with each other and with the growing economies further east.

I’m sure the UK will find a willing partner in Romania as we pursue this agenda in the EU. Romania needs to pursue economic convergence with the rest of the EU, but also to be sure that the EU’s model is still one that can deliver strong, sustainable growth in the global economy of the future. The Romanian Government is trying  to reduce bureaucracy and to accelerate the absorption of EU funds. It wants more flexibility in the labour market, which will help small businesses and cut costs. Procedures to access structural funds  could be simplified  across the EU, including in Romania. Ultimately our two countries are not competing with the rest of Europe – we are competing with the rest of the world.