The EU confronts huge challenges. These include accelerating innovation, deepening financial integration, protecting its security and maintaining the values of freedom, democracy and social welfare on which its society has been built since the second world war. None of this will be easy given the adverse changes the bloc now confronts, not least the political disarray in France and Germany. Yet, in confronting its future, it can build on great historic successes. The EU has, after all, managed to enlarge and extend its union over almost seven decades (and longer still if one goes back to the European Coal and Steel Community, created in 1951).
EU enlargement took it from an initial membership of only six (Belgium, France, Germany, Italy, Luxembourg and the Netherlands) to today’s 27 (down from 28, alas, after Brexit). It is not just enlargement that has been remarkable, but the extent of economic convergence among members. As Annette Bongardt and others noted in 2013: “One can broadly distinguish three phases in the EU convergence at the country level: 1) 1950-1973 — convergence of western Europe to US living standards; 2) 1974-1993 — convergence of northern and southern Europe to continental Europe; 3) 1994-2010 — convergence of eastern Europe towards western Europe. This convergence process has been broad-based and robust, with only Italy starting to diverge in the third period due to lower GDP growth.” Then, after 2013, the shock of the Eurozone financial crisis occurred, which created significant divergence, for a while. There has also been the faster recent productivity growth of the US in the recent past, which I looked at last week.
Of the nine countries that joined the EU between 1973 and 2000, all but one (Greece, alas) had raised GDP per head (at purchasing power parity) relative to the average of the original six by 2023. Ireland was, by a huge margin, the winner. But, given the role there of foreign direct investment, GDP was 30 per cent higher than gross national income in 2023. Again, all the 13 countries that joined between 2004 and 2013, mostly from central and eastern Europe, raised their GDP per head relative to the original EU six, some of them by huge proportions. Poland’s real GDP per head, for example, rose from 40 per cent of the EU six level in 2004 to 73 per cent in 2023. (See charts.)