Davos: What's next for the European Union

The shape of Europe after Brexit was a hotly debated topic at this year’s World Economic Forum (WEF) in Davos, Switzerland.

Against a turbulent global economic and political backdrop, the annual meeting of business, political and cultural dissected a range of pressing topics, such as climate change, human capital and the future of work.

However, the UK’s exit from the EU stole the limelight.

With a potential no-deal Brexit inching closer daily, the global economic impact was called into question by Angela Merkel, the German Chancellor. She voiced concerns about growing divisions across the continent in her keynote speech.

Angel Gurria, secretary general of the Organisation for Economic Co-operation and Development (OECD), raised similar concerns.

Gurria suggested Brexit is a systemic issue, with an impact that will ripple across Europe. Brexit’s economic impact will play out gradually, but there will be thousands of questions about the result, he argued.

Karen Frank, Barclays Private Bank CEO, also attended Davos with Barclays Group Chief Executive, Jes Staley. Frank said: “While we seek certainty for the sake of our clients, we are prepared for any eventuality.”

What it will take to reinvigorate a united Europe? This was a hotly debated question throughout the event.

Has Europe peaked?

Only 32% of European citizens agree that “things are moving in the right direction in the EU”, according to a representative survey announced at the Davos debate, ‘Averting peak Europe’.

A hundred years ago, Europe was the centre of the world, Ivan Krastev, chairman for the Centre for Liberal Strategies, said.

“It was much more important demographically and economically - it was the model everyone was looking to,” Krastev pointed out.

In 25 to 30 years, less than 7% of the world’s population will be European. it will be a much more pluralistic world, explained Krastev. This means that Europe, in a more traditional sense, may have already ‘peaked’.

While we could start to see Europeans lose a certain level of influence but on the other hand, Krastev thinks that Europe could be a lot more interesting than it was a century ago.

“The future will be better tomorrow,” Krastev commented.

A question of responsibility

The EU will remain, despite the growing discontent among many Europeans who don’t identify with the institutional framework of the EU, argued Roger Köppel, member of the National Council, Swiss Parliament.

There are fundamental imperfections in the framework of the EU, one being that it’s institutionally undecided whether it wants to be a union of states and a federal state, Köppel argued.

“Institutionally, it hasn’t decided whether it’s heading towards a nation state of Europe or a more multinational state union of different states. Therefore you get a lot of problems with responsibility,” he explained.

“We’re in a potentially dangerous period, but it’s also a healthy crisis because the politicians and the people start to address these flaws,” argued Köppel.

The answer will ultimately be that the EU will have to give back more power and responsibility to the nation state members, according to Köppel.

For other speakers, however, including Ulrike Guérot, Professor and Director of European Policy, Danube University Krems, the nation state was “not the strategy for survival”.

“What the Brits wanted was more of a nation state,” Guerot said. ”What they’ve got is basically the implosion of the nation state.”

Migration: a revolutionary act

It could be argued that the growing populism in recent years was a reaction against migration and free movement within the European Union, along with concerns about protecting national identity.

Modern technology and a change in the skills needed for the modern workforce may only have added fuel to the fire.

Ivan Krastev explained that countries in Central and Eastern European are often very ethnically homogeneous, for example, more than 96% of the population of Poland are of Polish origin.

He said that because of the constantly connected nature of the world today, everyone can compare their own lives with those living in other countries . Many of these people are living in the west.

“As a result, if you’re a young person living in the third world, if you’re living in a very poor country, a badly governed country, is it more rational to try to change your government or try to change your country?

Krastev argued that migration is becoming a revolutionary act in the modern world. “You are basically saying, if you want to make a change in one generation, (you have to) move”.

Karen Frank said: “We believe that conversation is the first stage in gaining deeper understanding of complicated geopolitical shifts. As such, Barclays will stay at the forefront of these challenging discussions.”

Any views expressed may differ from those of Barclays. All opinions and estimates are given as of the date hereof and are subject to change. No representation is made as to the accuracy of the assumptions made within. Barclays is not responsible for information stated to be obtained or derived from third party sources or statistical services.

Barclays is not offering to sell or seeking offers to buy any product or enter into any transaction. Any offer or entry into any transaction requires Barclays’ subsequent formal agreement which will be subject to internal approvals and execution of binding transaction documents. Neither Barclays nor any of its directors, officers, employees, representatives or agents, accepts any liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this communication or its contents or reliance on the information contained herein, except to the extent this would be prohibited by law or regulation.

Barclays is not obliged to inform the recipients of this communication of any change to such opinions or estimates. THIS COMMUNICATION IS PROVIDED FOR INFORMATION PURPOSES ONLY AND IT IS SUBJECT TO CHANGE. IT IS INDICATIVE ONLY AND IS NOT BINDING.