THE IMPERATIVE OF SUSTAINABILITY ECONOMIC, SOCIAL, ENVIRONMENTAL

Growth in the European economy is holding up but the general outlook is less bright than in recent years. The anticipated slowdown largely results from the gradual attenuation of the post-Great Recession recovery momentum and the convergence of growth rates towards a lower potential growth path. The slowdown of growth coincides with a revival of political turmoil -Brexit, Italy’s public finances, the trade war and turbulences in some emerging countries-. The upturn will come to an end at some point, and the euro area is not yet prepared for that, as imbalances persist and the institutional framework remains incomplete. The euro area has moved into a large trade surplus, which may not be sustainable. Nominal convergence remains an important issue that should be addressed by appropriate policies, beginning with surplus countries. Moreover, the incomplete adoption of a Banking Union may be insufficient to ensure banking stability. The ECB could have to come to the rescue with extended unconventional policies, complemented with automatic stabilisation measures working across borders within EMU.

 

The social situation has improved in the EU - on average, the unemployment rates across European countries are back at their pre-crisis levels- but differences across countries and sections of the population are huge. Policy makers need to be aware of possible trade-offs and synergies between economic, social and environmental goals in general and the Sustainable Development Goals (SDGs) in particular. In line with the SDGs and intended goals of the European Pillar of Social rights iASES aims at promoting policies - expanding social investments, pro-active industrial policies, reducing working time, increasing collective bargaining- that address these goals and overcome the direct and indirect negative consequences of unemployment.

 

Climate change is arguably the most serious challenge that we collectively face. Computing carbon budgets can be useful to warn policy-makers about the effort to be delivered in order to put society on the road to environmental sustainability. iASES evaluates the "climate debt" which is the amount of money that will have to be invested or paid by countries for them not to exceed their carbon budget, leading to three key policy insights. First, there are few years left for major European countries before exhausting their carbon budget under the +2°C target. Secondly, the carbon debt should be considered as one of the major issues of the decades to come since in the baseline scenario it represents about 50% of the EU GDP to stay below +2°C. Thirdly, the results of the estimation of this carbon debt are subject to numerous moral, ethical and technical assumptions that should motivate further and urgent investigations on this subject, critical to climate change mitigation, from both state bodies and independent research institutes.

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