Van Rompuy: EU's relative decline 'a happy thing'

Europe has "nothing to fear and everything to gain" from the rise of emerging economies – and its relative decline should even be welcomed as a sign that the rest of the world is moving in the right direction, according to political and business leaders at a high level conference in Brussels.

The President of the European Council, Herman Van Rompuy, said the rebalancing of the economic order was in some ways a "happy thing", because it meant there was increasing prosperity and falling poverty across the globe. "If the price to pay is that we are in some way declining, our relative power in the world's gross domestic product, I am happy even to pay that price," he said.

Speaking at the annual State of Europe event, organised by the think-tank Friends of Europe, Van Rompuy said that in recent decades hundreds of millions of people had been lifted from poverty and given "a decent life".

And Vodafone executive board member Matthew Kirk told the conference that globalisation was not a zero sum game but one "from which everyone can benefit". He said: "I do a lot of business in Africa, the Middle East, Asia and so forth and I say very, very strongly, Europe has nothing to fear at all from these countries becoming more prosperous. We have everything to gain from that – the planet, humanity has everything to gain from it.

"The question for us is whether we can be competitive, innovative, dynamic enough to secure what we want in our continent." He said the key question that was whether European policy-makers' current priorities were designed to "preserve the legacy of a successful past or to design the framework for a successful future".

Kirk highlighted two ways that the European Union could stimulate growth: by completing the digital single market to "unlock the ability of small enterprises to market themselves, their products and their goods across a much wider market", and by boosting investment in research and development.

"At the moment R&D spending in the EU runs at about 2 per cent of GDP – it is 2.6 per cent in the US and 3.4 per cent in Japan. It's no surprise that we are lagging behind in innovation." He pointed to a study showing that investment in broadband in Europe could "rapidly" create one million jobs and €850bn of new economic activity.

Meanwhile Van Rompuy added that the topic went beyond economics. "The biggest decline of Europe was the first half of the 20th century – we waged war, we had tens of millions of deaths. That was real decline.

"So when we speak about decline we have to see this in a historical perspective and not only on a day-to-day basis. We have to keep in mind, from where we came and where we are now because we are not working for next year or the years ahead but for generations to come." Noting that the US was having a similar debate about its own place in the world, he joked that it was "only a small consolation that others speak about the same topic".

Van Rompuy said it was "completely normal" for economic expansion to be more rapid in emerging economies than in mature economies – though he cautioned that structural growth was currently too slow in Europe and unsustainably high in some parts of the world.

On the more immediate question of resolving the economic crisis, he admitted Europe could only convince the rest of the world it was on the right track by making clear progress, not simply by talking about it. "We will not convince them, the other leaders, by our speeches – which are brilliant – but we can convince them by our results," he said during a question and answer session.

He added that Europe was not the "only obstacle" to the restoration of global growth. "Some of those emerging countries have to reorient their economic models. Some of their models are unsustainable. We are not giving lessons to them but reminding them kindly, in a friendly way, that in the longer term they will also face structural reforms in their economies and in their societies."