European policymakers should not shy away from the political discussion, but they also need to enter into the fundamental economic debates about free markets, free trade and free capital flows, and spell out how the European project has helped reap the benefits while addressing the costs.
The concerns expressed about globalisation are also coinciding with recent signs of economic deglobalisation: trade and financial flows appear to have taken a pause after the global financial crisis, partly because global banks had to deleverage and change their business models.3 Deglobalisation is most visible in the re-emerging correlation between domestic saving and domestic investment, known as the Feldstein-Horioka puzzle.