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  • 2018/10/11
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The economy is in the throes of doubt. And so is Europe.

Le doute méthodique, donc cartésien, semble avoir envahi notre établi médiatique. L’Europe doute, l’Allemagne s’inquiète, l’Italie déroge à toutes les règles, l’Amérique hésite, on pourrait presque convoquer Artletty pour tenter d’expliquer le climat général. « Atmosphère, atmosphère, est-ce que j’ai une gueule d’atmosphère ? » Plus sérieusement, la revue de presse internationale pourrait faire froid dans le dos. Alors parlons-en en face !

Methodical, and thus Cartesian, doubt appears to have infested our media. With Europe full of doubt, Germany worried, Italy defying all the rules and America hesitating, the famous line of French actress Arletty in the film Hotel du Nord seems apposite. “‘Atmosphere’, ‘atmosphere’? Do I look like an atmosphere to you?” On a more serious note, a review of the international press casts a certain chill. So let’s warm to the subject!

In the French weekly Le Point, Luc de Barochez expresses his viewpoint through the title of his editorial: “Europe after Merkel and Putin”. He goes on to write, “Vladimir Putin and Angela Merkel have lost all their intuition, [...] their governance problems are set to grow”. So here we are.

Government leaders appear unable to push though reform or imagine the future. Le Figaro Economie takes up this point by publishing the IMF’s report on the world economy. According to the financial daily, “the aggressive trade stance of the United States along with Brexit and the rise in US interest rates have led the IMF to make a downwards revision to its GDP growth forecasts for 2018 and 2019. French GDP growth is expected to come out at just 1.6% this year.” It goes on to write that “the last review of the global economy by Maurice Obstfeld, the IMF chief economist who will be retiring at the end of the year, is marked by growing uncertainties”. At the autumn meetings of the IMF and World Bank in Bali, the institution tasked with watching over the health of the world economy has thus announced a downwards revision of its forecasts. It expects global GDP growth in 2018 and 2019 to be 3.7% rather than 3.9%.

According to the IMF report, growth in the United States, boosted by fiscal measures, will remain exceptionally robust in 2018 and in 2019 will be only slightly lower than the IMF’s initial forecasts. In contrast, Eastern Europe (including Turkey), the Middle East and North Africa will fare less well than initially forecast. After a substantial 6% gain in 2017, growth in developing European countries is expected to fall to 3.8% this year and just 2% next year. The Middle East and North Africa are expected to do better than last year but growth will be limited to 2% instead of 3.2% this year. The eurozone has not been spared by the slowdown, with France to lose 0.2 growth points this year relative to the forecasts published in April.

Brexit continues to breed doubt in Europe, as if the decision were fated to lead to no agreement. “With a ‘no deal’ situation increasingly likely, the UK economy is plagued by worries, as are the players in Europe who would be indirectly impacted by the crisis. The members of the Transport and Tourism Committee of the European Parliament have become openly pessimistic in recent months. A no-deal outcome would have disastrous consequences on the transport sector, be it aviation, road freight transport, sea or rail.” The result would be a decrease in passenger and goods traffic and a lack of border infrastructure for customs and health inspections. “According to a report on the impact of a no-deal outcome on transport published by the European Parliament Transport Committee, ‘some studies on the subject indicate that up to 2030, the average cumulative losses could correspond to 0.44% of GDP for the EU-27 and 4.2% for the UK in a pessimistic scenario’”. “We sought to assess the effects on countries and France is clearly on the front line.” Which makes it more difficult to take a serene view of the future and push through the necessary reforms.

Europe is no longer a topic, it is an obligation. So let’s get down to work!

Christian Moguérou

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