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Social cohesion

Social cohesion

A uniquely successful project

Flows of goods vividly demonstrate how deeply Germany, a leader in exports, is interwoven with Europe through the domestic market. But the most important achievements of the EU are peace, freedom and solidarity.

About the persons

Stephanie Schoenwald and Dr Klaus Borger monitor and analyse macroeconomic development in Germany and the eurozone in KfW’s Economics Department.

The European Union is the most successful political and economic community of sovereign nations in history. Material prosperity and economic performance in the EU are more than twice as high as the global standard. Its member nations are also among the global leaders in income equality, education and life expectancy. EU membership generates substantial economic benefits for Germany and the other countries. As a result, non-member states like Switzerland and Norway have fallen into line with EU rules and contribute a substantial amount to the EU budget without having voting rights of their own. Brexit is an example of what could be at stake, even just economically, if close EU connections were to break down.

The key to the EU’s success is the will of the member states to cooperate on a long-term basis. Cooperation leads to a process of give and take, resulting in benefits for all: nations who focus on exports, like Germany, specifically benefit from free trade, others benefit from capital inflow or economic aid. But the EU’s value goes beyond economics. Democracy, human rights, the social market economy, free movement of workers, and consumer and environmental protection all add up to ensure a high quality of life and individual development opportunities in Europe. The most important aspect, however, is the preservation of peace.

Read more under the infographic.


Benefits Europeans experience due to the EU:

1. As constitutional democracies, the member states are obliged to protect freedoms and human rights, and to jointly preserve peace. In a world in which 40 per cent of all nations are still ruled by dictatorships, and wars result in millions of deaths and refugees, this kind of community of stability and shared values is a valuable asset. Against the backdrop of two devastating wars in the past 100 years, we must never allow ourselves to forget this.

2. Even without the United Kingdom, the EU will remain the second largest trade bloc economy in the world with a gross domestic product of over 13 trillion euros. It prevents duties and other barriers from economically fragmenting Europe. Uniform rules ensure fair competition between European businesses. This reduces the costs and risks of trade and investments. The EU’s 447 million citizens (not including those in the United Kingdom) have access to a wide range of products at more favourable prices.

3. The EU is a community of solidarity. The EU budget provides financial aid to weaker regions for expanding competitive structures and improving the quality of life locally. In the current funding period until 2020, the member states are providing over 450 billion euros from European structural and investment funds for this purpose. Germany also benefits from this.

4. The EU acts as a stable community. Since the financial crisis, it has stabilised national economies that were heavily affected and saved people from a system collapse using guarantees and assistance loans.

5. International movement of workers has created a labour market with over 200 million employees. Every EU citizen can look for work in the member nation of their choosing. This increases opportunities for professional achievement. It also contributes to higher incomes, preventing skilled labour shortages and reducing unemployment.

6. The EU gives us tangible benefits for everyday life that we often inadvertently take for granted. These include freedom of travel without formalities at the border, Europe-wide consumer and environmental protection, a wide spectrum of goods and services, and the euro as a common currency. In addition, a strong EU improves our chances of living in peace, freedom and prosperity in the future. We need innovative businesses, more investments, sound national budgets, stable banks, controlled migratory flows, a sustainable energy supply, climate protection and external security in an increasingly confrontational world. Those are massive undertakings that Europe can only overcome together.

Published on KfW Stories: Thursday, 9 May 2019