Company

Growth - it's up to Europe now

An article by Claudia Nemat, Member of the Board of Management responsible for Europe and Technology

 Claudia Nemat, Member of the Deutsche Telekom AG Board of Management, Technology and Innovation

Claudia Nemat, Board Member Deutsche Telekom AG, responsible for Technology and Innovation


Europe has the power to emerge from the current crisis in even better shape than before. This week's ruling by Germany's Constitutional Court means the European Stability Mechanism (ESM) can now begin offering assistance to euro member states in difficulty. And those states would be well-advised to take advantage of that assistance to get their finances in order. As the economically stronger countries in the eurozone take on liability for the weaker members, Europe will be bound together even more closely: the joint representation of economic interests and the harmonization of markets should give rise to a shared understanding of economic and industrial policy as well as of budgetary and fiscal policy.

One maxim that applied before the crisis rings even truer now: We cannot defend our prosperity in Europe by working against each other, only by working in unison. Regrettably, the financial crisis, sovereign-debt crisis and euro crisis provide fertile ground for political particularism and the renationalization of economic and finance policy as well as for protectionism and unilateralism. Opinions may well differ on the financial policy mechanisms behind the decisions currently being taken in the eurozone. Ultimately, however, they are based on the principle of solidarity in the pursuit of long-term economic strength. In other areas - namely economic policy - Europe should not forsake the principle of solidarity. Governments should not attempt to play the entrepreneur, weakening the hand of foreign companies against their home-grown competitors, or hobbling growth in promising industries through the imposition of ad hoc taxes. Targeted economic policy creates a framework that is conducive to growth and complies with European standards so that the continent's companies can prevail in global markets.

Europe must give top priority to creating growth, especially in those industries with potential for future growth, such as information and communication technology, nanotechnology, biotechnology and environmental technology. Europe would be well-advised to encourage investment instead of withdrawing capital, and to permit the development of global corporate champions, even through mergers - while at the same time preserving the competitive identity of the European single market.

Investments in the telecommunications sector in particular can have an impact far beyond that sector itself. Such investments act as an incubator for innovation and massive productivity gains in logistics, healthcare, education, tourism and many other sectors. Forty percent of all macroeconomic productivity gains in Europe are generated by expenditure on information and communication technologies. The telecommunications sector accounts for five percent of European GDP. Experts estimate that an increase of ten percentage points in broadband availability would add 1.2 percentage points to GDP growth. An opportunity to achieve this is in the offing: In July, Neelie Kroes, Vice-President of the European Commission and Commissioner for Digital Agenda, announced a reorientation of European regulatory policy, a regulatory policy with short-term investment incentives, and long-term stability until at least 2020.

Deutsche Telekom and other major ICT companies in Europe will survive in the global market only if the EU and its member states push for greater integration and cooperation - protectionism and particularism will not lead to economic growth. And the idea of solidarity underlying the ESM provides a good model for that.

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