New Concept for Europe InitiativeRenew Europe January 2018Prepared in collaboration with McKinsey & Company World Economic Forum®© 2018 All rights reserved.No part of this publication may be reproduced orTransmitted in any form or by any means, including Photocopying and recording, or by any information Storage and retrieval system.REF 3105173Renew Europe: Perspectives from the New Concept for Europe InitiativeContents3 Preface4 Executive summary7 The voice of the young generation9 Five themes of particular importance to Europe10 Human-centric economy14 Democracy and governance18 Security and defence22 Migration and borders 27 Energy and sustainability31 Conclusion32 Contributors and acknowledgements37 EndnotesPrefaceRecent months have shown positive momentum for Europes political and economic situation. There is a drive for much more solid and broad-based progress, and the European Central Bank has substantially increased its forecast for economic growth in the Eurozone over the next few years. Unemployment is falling and new opportunities for young people are being created. This uptick in optimism has created a window of opportunity for Europe to address the issues that are most crucial to the well-being of its citizens, businesses and other stakeholders.However, many challenges remain and must be addressed in a substantive manner: the impact of the Fourth Industrial Revolution, inequality, divergence across the continent, ageing and migration and other disruptive forces are already testing Europes fundamental values. Furthermore, Europes political landscape is fragmented and trust in its institutions is still too low.Europe has no choice but to move beyond its divisions and use this window to develop practical, feasible ideas that make a meaningful difference to peoples lives, and to build momentum for critical long-term transformations.We hope this report becomes a catalyst for a much-needed conversation about how Europe can act in solidarity and demonstrate the bold leadership required, before this window closes. This is a call for ideas and for actions that are audacious and visionary enough to create the robust and growing Europe the next generation deserves.We would like to thank the members and chairs of the Europe Policy Group and the Youth Champions for their contributions and ideas, as well as McKinsey & Company for the analysis they shared.The World Economic Forum is keen to provide a platform for this continued dialogue and exchange of ideas and we hope that all citizens, businesses and other leaders join the conversation on what it will take to build a new concept for Europe at #RenewEurope.Klaus Schwab, Founder and Executive Chairman, World Economic ForumBorge Brende, President, Member of the Managing Board, World Economic Forum4 Renew Europe: Perspectives from the New Concept for Europe InitiativeEurope has enjoyed 60 years of peace and prosperity, and its economy has largely recovered from a difficult decade that clouded those accomplishments. The “New Concept for Europe” initiative aims to inspire shared and positive aspirations for the future, to help Europe sustain its well-being and address the disruptive forces reshaping the world, within and beyond European borders1. Based on the values and hopes of Europes next generation, it provides a starting point to develop a vision and practical ideas to move forward in addressing these potentially destabilizing forces and assuming a global leadership role. Now more than ever we must stand up for European values and I call on youth to create their Europe.Klaus Schwab Founder and Executive Chairman, World Economic ForumThis initiative is a consultative effort. It aims to engage a broad spectrum of European stakeholders to ensure the path that Europe charts meets their needs and expectations. Rather than providing an academic view of the most important next steps for Europe, this report is a synthesis of the ideas and aspirations that European youth, as well as leaders from politics, business, academia and civil society, have for Europe.The months of discussions that informed this report have made it clear that Europes next generation believes in a modern set of European values, and fears these are coming under threat. Young people are, for example, enthusiastic about the promise of the Fourth Industrial Revolution but concerned that Europe should maintain its commitment to equality and opportunity, and not allow the digital economy to leave many Europeans behind. They see Europes openness and diversity as a core strength, and do not want concerns around migration and globalization to threaten it.The “New Concept for Europe” initiative addresses these and other concerns by bringing together a diverse group of Europeans to propose aspirations and initial ideas for reform in five areas of particular importance to the European agenda: Human-centric economy: We are living through the beginning of the Fourth Industrial Revolution. As it profoundly transforms the way we live, work and interact with one another, how can we achieve progress and well-being for citizens? Democracy and governance: The increasingly fractured political landscape and surge of populist and extremist voices in the last election cycle are symptoms of declining trust in the effectiveness of democratic institutions in the face of global challenges. What novel approaches could rebuild trust in democratic principles and governance, and how do we bridge the divergence across the continent? Security and defence: Europe is facing an increasingly multipolar and fractured global order. It remains a haven of peace and security. What measures would be effective to ensure Europes defence and security leadership in the future? Migration and borders: Europe has been struggling to formulate a united and lasting strategy in dealing with immigration. What ideas could help to unblock the discussion and move towards a holistic, forward-looking migration policy? Energy and sustainability: Europe is developing the foundations for a world-leading green economy, but it is still largely dependent on fossil fuels. How could Europes leadership be encouraged to implement the Paris agreement and move towards a more sustainable economy?In all of these areas, Europe can benefit from standing together. They are also at the forefront of the minds of European citizens: these five themes together cover more than two-thirds of the policy areas in which most Europeans say they want the EU to intervene more than at present, according to a recent Eurobarometer survey2. Executive summary5Renew Europe: Perspectives from the New Concept for Europe InitiativeRebuilding trust in Europe: Three considerations Recent research by the McKinsey Global Institute (MGI), including analytical reports, surveys of citizens and business leaders across Europe, and submissions to a prize essay competition, has shown that there is great appetite for change in Europe particularly as the economy has recovered but also lingering distrust in overall political, economic and social systems. Rebuilding that trust will require simultaneously addressing the underlying drivers of citizen concern and sustaining economic momentum. The following are three key “ingredients” for the overall development of trust, which are closely tied to the five themes considered in this report:1. Restoring economic dynamism and investment for inclusive growth to restore economic confidence: while recovery is here, it remains uneven and recapturing the momentum will require a renewal of business confidence. Business investment is still below pre-crisis levels, at 12.4% of GDP in 2016. When we have surveyed business leaders about what is holding back investment, they mention lingering uncertainty and weak demand, which is hampering growth and productivity. 2. Capturing the benefits of globalization, while addressing the backlash against trade and migration as a step to improve confidence in social cohesion: The increased flows of goods, finance and data have raised world GDP by at least 10%, adding almost $8 trillion to GDP, and Europe has been at the heart of these connections. Today, however, the continent faces a popular backlash against trade and migration two of globalizations core tenets. For policy-makers and business leaders, the complex challenge ahead is how to capture the benefits of continued growth in these flows while mitigating negative consequences, including income inequality and social cohesion.3. Embracing automation and AI to drive long-term competitiveness, while addressing challenges from the future of work to help build confidence in meaningful employment. Automation technologies including artificial intelligence (AI) will bring benefits in the form of increased productivity, safety and corporate performance, but also considerable transition challenges, as humans work ever more closely with machines, and in some cases, are replaced by them. For Europes five largest economies France, Germany, Italy, Spain, and the United Kingdom we estimate that about $1.9 trillion in wages and 62 million workers are associated with technically automatable activities. The risk is that automation will exacerbate social and economic divergence, and also that concern about its implications could slow down progress.Trust is an intangible but critical feature of modern democratic societies; it is easy to lose and hard to regain. Addressing these three underlying drivers of discontent can be an important starting point, but it is far from comprehensive. A complete reboot of European trust would also require evolution of EU and national governance, revamped credibility in delivering public services, and true innovation in citizen engagement. The World Economic Forum convened the multistakeholder, multigenerational New Concept for Europe initiative to begin the thought process on necessary reforms in each area. In summer 2017, the Forum brought together a group of 37 “Youth Champions”: young adults from all over Europe, including representatives of the European Youth Forum, the European Youth Parliament and the World Economic Forums Global Shapers community3. In parallel, the Forum established the Europe Policy Group, comprising over 130 thought leaders from government, business and civil society. With input from the Youth Champions, the Europe Policy Group developed aspirations and practical ideas under the guidance of five “theme champions”.The following chapters present the aspirations and ideas that the policy group developed for each theme. Though these aspirations vary across topics, they overwhelmingly call for a more inclusive, open and connected Europe that is also secure, safe and rooted in European values. For example, they look to build a Europe where “principles of liberal democracy thrive, and institutions are relevant, responsive and trusted” and where “governments and societies take greater responsibility for their own security and defence, with Europe becoming the dominant security actor in its own region”. Across the five themes, the policy groups ideas find ways to exploit Europes unique diversity and scale and improve engagement with citizens. Many ideas propose methods of sharing resources and innovations across Europe, so that the region can handle challenges that are too big for individual countries and enabling each country to access a larger range of skills, knowledge and tools. These include proposals to connect cities dealing with similar security challenges, unified defence procurement, and a pan-European demand-driven immigration system. Other ideas explore how reformed relationships between Europes citizens and institutions ensure that Europe evolves to let citizens contribute and meet their needs. For example, they propose a Universal Right to Learn that enables citizens to pursue lifelong learning of their choosing, and free access to energy data to give consumers choice and control in the transition to a cleaner economy. These two aims citizen-centricity and drawing on Europes diversity and scale are not at odds with each other. In the transition to the Fourth Industrial Revolution, it is not only increasingly possible but also more necessary than ever to simultaneously engage citizens and connect the resources needed to address the challenges ahead. The ideas presented in this report are examples of achievable ways to build momentum for the change needed in Europe. They are not intended to form a comprehensive reform agenda, but rather to accelerate conversation and action. The New Leaders for Europe a community of dynamic politicians committed to shaping the regions future have already started thinking about the implementation of some of these ideas, and the additional actions needed to create a new concept for Europe. It will now be essential to mobilize stakeholders from government, business and civil society to translate the strongest ideas into action, as Europe transitions from reactive crisis management to proactively addressing the future. 6 Renew Europe: Perspectives from the New Concept for Europe Initiative!Consultation with Youth Champions21 June 2017Policy Group brainstorming JulySeptember 2017Reshaping Europe meeting29 September 2017Policy Group idea ref_iningOctoberNovember 2017World Economic Forum Annual Meeting2326 January 2018Multistakeholder action and discussion to work in groups to definebold aspirations for five themes The World Economic Forumconvened 170+ stakeholders and to propose initiatives to get started. Human-centric economy Driving progress and citizen well-beingin the Fourth Industrial RevolutionDemocracy and governanceSecurity and defence Assuring Europes future leadershipthrough regional collaboration Migration and bordersHumanely and professionally respondingto the new migration reality Energy and sustainability Leading the way in implementing theParis Climate Agreement in a truly green,affordable and secure manner Universal Right to Learn to enablecitizens to train for the future of workDigital Democracy Compact to articulatethe technology sectors commitmentsto democratic principles.SeCURE Cities programme to connectcities to jointly address terrorism,crime and violence. Common digital identity for refugeesand asylum seekers, to support moreeffective management of asylum f_lowsFree access to energy data to optimizesupply and demandmatching, and provideconsumer choice 37 Youth ChampionsSenior policy group members 139 30European youth surveyedon values and trade-offs Additional contributionsfrom local communities61632 Academia39 Public sector14 Civil society54 BusinessInitiative timelineExample initiativespage 20page 16page 12page 24page 29This project is a collaborative effort of the World Economic Forum and McKinsey & Company. The World Economic Forum was responsible for project management, and the work of the groups,