Nout Wellink: Europe at a Crossroads

2017-07-09 IMI

This is the speech made by Mr.Wellink at IMI McKinnon Lectures (No. 12), 27 June 2017. Nout Wellink, Member of IMI International Advisory Board, Former President of the Dutch Central Bank. GLOBAL PICTURE Introduction The world is changing rapidly. We are witnessing historic changes in economic and political relations. These changes will put to an end a period of 500 years in which the Western countries have ruled the world. Self-evidently the US will not disappear overnight as the world's most powerful country. But what we have in front of us is a complex, painful, potentially accident-prone adjustment process in international relations (1). The Trump phenomenon but also Brexit should be seen in this context. Policymakers of the major countries face a number of complex challenges as to how to deal with this adjustment process. It requires a lot of wisdom and also a full understanding of the interdependencies in tomorrow’s fully integrated world. In such an interdependent world even the powerful loose power. Economists will tell you that the integration of China and other countries into the world economy is improving prosperity and to the benefit of all. In theory they are right, but I want to qualify this view a bit. The impact of China (and more broadly speaking globalisation) on other parts of the world has been so big and has come so fast, that it seems to have exceeded, at least in the short term, the absorption capacity of Western countries. We knew, of course, that structural reforms, in labour markets and product markets were necessary to cope with a globalising world (2), but socially and politically these reforms proved extremely difficult to implement in democratic societies. According to certain studies the trade deficit with China has cost the US millions of jobs (3). The same job-losses stories have been told about the UK and other countries. In addition, there is the complaint that the income gains from globalisation have not been evenly spread. Recent studies link the rise of populist movements in Europe to the globalisation process (4), but also to other factors such as massive cultural changes in our societies, resulting in a cultural backlash among people who feel threatened by this development (5). Whatever the merits of these (numerous) studies, I think that the industrialized world seriously underestimated the scale, speed and the impact of the globalisation shock. China’s membership of WTO was a quantum leap. That said it is not only globalisation that plays a role in the job losses and the income inequality problems in industrialized countries, but also - and increasingly - technological developments. The B.I.S. came in its recently published Annual Report 2017 (6) to the conclusion that “globalisation is not the main cause of increased within-country inequality; technology is”. Therefore, focussing only on globalisation, as the US Administration seems to do, is fighting the last war. Risk of rising protectionism The present US Administration argues that it is not against globalisation and free trade, but it should be "smart trade". For the time being the only interpretation can be: protecting your own industry from foreign competition by tariffs, special taxes, moral suasion, etc. (“Buy American, Hire American”). Nevertheless, it is still too early to pass judgment as to the trade policy of the US in the coming years, but the omens are not entirely good. Kind of dialogue has started with China, but also with Canada and Mexico, and China is, at least for the time being, not anymore as a currency manipulator on President Trump's radar screen. Let’s wait and see what the future will bring and whether the US Administration will put its money where its mouth is. Trump's "smart trade" (these words have also been used by Tillerson) is his reaction to what he sees as unfair competition from especially Mexico, China but also Germany. It would be naive to deny that sometimes there is unfair competition, but if China and/or Mexico and/or other countries violate trade rules, one should cope with these violations in the context of WTO and not start a damaging trade war. What we should do in the industrialized part of the world, is increasing what I called our absorption capacity, that is to say we should speed up structural reforms and take additional measures (e.g. better schooling), so as to cope better with and fully reap the fruits of globalisation. It is undeniable that globalisation “has had a profoundly positive impact on people’s live over the past half century” (6). It is interesting to see how the Chinese leadership has reacted to Trump's trade ideas. Immediately (on November 19th, 2016) President Xi Jinping stated that China "will remain fully involved in economic globalisation". And later, at the Davos' World Economic Forum, Mr Xi stressed that "Countries should view their own interests in the broader context and refrain from pursuing their own interests at the expense of others". And: ...ships should not scurry back to harbour at first sign of a storm". Premier Li Keqiang repeated these messages in his keynote speech at the opening ceremony of the so-called Summer Davos meeting in Dalian on 27 June 2017. To some extent China already has developed an answer to the protectionist threats coming from the US. China strongly promotes a "Regional Comprehensive Partnership" and a broader free trade zone for Asia, thereby creating its own, vast economic zone. Creating its own hinterland is also what, to my mind, China is aiming at with its "One Belt, One Road"-project. This project seems as much a political as an economic project to me. The US ideas about "smart trade", trade that fits in an "America first"-philosophy, have made the Europeans aware that they should not overly rely, as they did in the past, on its traditional ally America. Strengthening trade relations with China and other countries in the Far East has clearly come higher on EU’s agenda. The interesting thing is that Trump's policies and statements, also in other area's such as NATO and environmental protection, have brought European countries closer together (7) and has led them to explore new alliances for the future. It’s true, challenges often create new opportunities. Exchange rate issues The US has a trade deficit with China, for years in a row now, of around $300 bln. This is the result of exports amounting to some $100 bln and imports of around $ 400 bln. Trump blamed China for being a currency manipulator. That song has faded away. For the time being at least, because I am convinced that this music will get a replay in the future. The US did the same with the Japanese in the sixties and seventies of the last century and forced the Japanese authorities to strengthen the yen dramatically. To my mind China has contributed to the international adjustment process at a scale that is highly underappreciated. The country succeeded in reducing its current account deficit from 10,1% of GDP at the beginning of the financial crisis in 2007 to 2,3% in Q3 2016. During a major part of that period the rmb experienced a very strong appreciation. In the course of 2016 the rmb became part of the SDR basket and the authorities started, self-evidently, to focus more on stability vis-a-vis a basket instead of vis-a-vis the US dollar. At the same time they allowed for a bit more flexibility in the development of the rmb. As a consequence the rmb weakened further, not surprisingly so taking into account the gradual tightening of monetary policy in the US and some doubt in the Western world as to the strength of the Chinese economy. The PBoC, the Chinese central bank, lost almost 1 trillion dollar to mitigate the downward pressure on the rmb. In addition, last year measures were taken to restrict capital outflows. I think the Chinese authorities did what they could and should do to keep the process as orderly as possible. But this is not the point I want to make. The point I want to make is that, if you ask from the Chinese authorities to liberalize their economy, including the capital account of the balance of payments, one should accept that market forces determine more than in the past the exchange rate. It will increase what is called by the B.I.S. “the “excess elasticity” of the international monetary and financial system- its ability to amplify financial booms and busts and thereby cause serious macro-economic costs” (6). For me these developments show that one should be very careful with a quick, complete liberalization of the rmb, because the result could be substantial, unwelcome capital flows, bringing also other countries in serious problems. In summary Let me - before turning more specifically to Europe - try to summarize the message of this part of my lecture. Never in economic history we have seen a country of the size of China (and others are following) integrating in the world economy in such a short period. We are clearly entering a new era, with inevitably economic and political hick ups during this process. We should try and control as much as possible these hick ups, in close cooperation. Speaking in very general terms, the Western economies were not sufficiently prepared for the globalisation shock. Their economies were too rigid, not flexible enough to adjust to the new circumstances and to fully reap the benefits of globalisation. This especially holds for Europe. Europe, therefore, is clearly at a crossroads. If it does not speed up its reform program the forces against globalisation will further increase. Secondly, Europe has to re-assess its position in a globalising world if the US is moving away from its traditionally open attitude towards international trade. But even if the US is not taking steps back, the US as well as Europe should realise that a world different from the past is emerging, with new players and increased interdependencies (8). My feeling is that we are not sufficiently prepared for this world in which capital flows can freely move around and in which exchange rates are mainly determined by market forces. The institutional and analytical framework to cope with such a world is still missing. In this respect we are all at a crossroads now, not only Europe or China or the US. EUROPE MORE IN PARTICULAR Economic developments It is always fun to read the Bloomberg's "Pessimist's Guide" to the coming year. In December 2016 Bloomberg published on the internet a list of potential disasters in 2017, ranging from the unpredictable consequences of the election of Mr Trump as President of the United States (especially in relation to China), to the rise of populist movements on the European continent (elections in France, the Netherlands, Germany, Italy), and, of course, Brexit. So, a lot could have gone wrong in 2017, but as far as the European economy is concerned I am inclined to say: “So far, so good”. That being said we are only on the half of the year! In the Netherlands and France populist anti-Europe parties were defeated, in France by a landslide, and in spite of the new US President and the Brexit-discussions recent economic figures (gdp, unemployment) are very encouraging. On an annualized basis the euro zone economy was expanding in the first quarter of 2017 at a rate of 2.3%, clearly outstripping the 1.2% growth rate of the US in that quarter. Positive news is also that the dispersion of growth rates between the members of the monetary union is at its lowest level since the start of the union in 1999 (9) and that consumer confidence in June stroke a 16-year high. Longer-term developments Looking at some more long-term developments, the picture becomes less rosy. Real per capita gdp levels were already widely diverging at the trough of the financial crisis (2009). Portugal’s per capita real gdp, for example, amounted in 2009 to only 54% of Germany’s. However, in the period 2009-2016 the divergences between euro area members have further widened. During those years real per capita per capita in Germany increased, cumulatively, with 12% (US 9.8%), 3.3% more than in the UK, 7,4% more than in France, 10.3% more than in Spain, 14.3% more than in Italy, and 32.5% more than in Greece (8). This is not a very healthy situation. From a system’s perspective I am especially worried about (the persistency of) the income and competitiveness gaps between the countries in the euro area. What also worries and even frightens me is the level of unemployment. Although total unemployment is at its lowest level - 9.4% - since 2009, it is still extremely high. This especially holds for youth unemployment in Southern Europe. On average youth unemployment amounts to 19.4% in the euro area, but in Italy, Spain and Greece this rate has reached levels of 35,2 %, 41,5% and 45,2% respectively (10). Europe, therefore, is faced with the risk of a lost generation. Some observations Some interesting observations/ conclusions can be drawn from the above. First of all, the British - in the context of the Brexit discussion - often portray Europe as the world's weak link from which the wonderful, dynamic UK economy should decouple itself. However, the reality is that on a per capita basis (cumulative real growth of 8.7% in 2009-2016) the UK is, indeed, doing better than France (4.6%) but clearly lagging behind Germany (12%). My second observation concerns the frightening, still growing gap between the real per capita growth and the unemployment levels in the strongest European countries, and a number of other, weaker euro area countries. This is very worrisome, not only from an economic, but also from a political perspective. It is a problem European countries should address, otherwise it will endanger at some point in time the EU-project and, self-evidently, the European Monetary Union. Many observers, also the IMF, are of the view that Germany and the Netherlands run much too large a surplus on their current account and that they should stimulate their economies via tax cuts and infrastructural investments (11). They are right from a balance of payments point of view (although in a monetary union only the balance of payments of the union as a whole matters). Such a policy would also contribute to a higher inflation in core countries and lift the inflation rate in the euro area as a whole. An expansionary German and Dutch budgetary policy might furthermore give some stimulus to other economies in Europe, but at the end of the day such a policy will, ceteris paribus, even further strengthen the German/Dutch economy vis-a-vis the weaker European countries. The underlying, more fundamental problem is that the euro is too weak for Germany, but too strong for some other countries. Strengthening the economy of weaker countries can only solve this very fundamental problem. The present approach, in which the ECB, the European Central Bank, plays kind of a bridging role, is buying time for governments to pursue the right policies, but cannot be continued forever. The authorities, especially in the weak countries, should use the present recovery to complete unfinished reform businesses. Brexit In assessing the situation in and the perspectives for Europe it is inevitable to spend some words on the British leaving the European Union. In a speech I delivered more than a year ago on Brexit I said that the UK remaining a EU member was no longer a racing certainty. Unfortunately I added: "The prospect of the UK leaving the EU is real but my instincts tell me - although I hover between hope and fear - that voters tend to swing back to status quo if the become uncertain about the consequences for themselves". My instinct clearly throwed me off. The lesson is that we should be very careful in forecasting the “future” of Brexit. The more so because many completely unforeseen developments have taken place recently. It is useful to make a distinction between the short-term effects of the decision to leave the EU and what could/would happen after a few years. A predictable short-term effect was the depreciation of the pound, which actually took place. This had an impact/is having its impact on prices, real disposable income and consumption. More interesting is what will happen in the years ahead. That totally depends on a great number of unknowns. At present that number is even bigger than I thought in June 2016, one of the reasons being the dramatic outcome of the snap elections in the UK on June 8th. Instead of a victory the conservative party, under the leadership of Mrs May, lost its majority in the parliament. Mrs May had "sold" the snap election with the argument that "Now, more than ever, Britain needs a strong government to get the best Brexit deal for our country and its people.” (12). After the disastrous outcome of the elections Mrs May needs, for a majority in parliament, the support of DUP, the Democratic Unionist Party, the largest party in Northern Ireland. It is difficult to assess how stable this support will be. DUP seems prepared to back up a Conservative minority government on a case-by-case basis. Relying on DUP is not only humiliating for Mrs May, but also politically dangerous. The UK government has always stayed far away from the internal Irish problems. On the one hand DUP is Eurosceptic, on the other hand it wants soft borders with the Irish Republic, i.e. the EU. The implication is that DUP is against a hard Brexit as favoured by Mrs May, who has said time and again that no deal is better than a bad deal, (“a reckless approach”, according to the Labour Party; I happen to agree with that). If lawmakers in Scotland would be given a separate vote on the Great Repeal Bill, which puts EU-law into British law, the situation might become even more complex if they would decide to vote down this Bill. At this very moment it is completely unclear what the UK policy/position during the negotiations will be. It is also unclear whether or how long Mrs May will survive. Her position has been eroded further by her handling of the London Tower Fire, which was slammed by the surviving victims and the media and for which she had to apologize. The seriousness of the uncertainties on the British side should not be underestimated, because time and tide wait for no man. The 2-year period of art.50 of the Lisbon Treaty has started with the notification of the intention to leave the euro area on 29 March 2017. The European Council can decide unanimously -it's true - to extend this period, but the sword of Damocles is hanging above the heads of the British as of the notification to leave the EU. Until now the remaining EU countries have sticked together. Last March they have formulated legally binding instructions for EU's chief negotiator, Michel Barnier. In four area's clear cut principles for the negotiations have been formulated: the UK should pay an exit bill (meet earlier commitments), the rights of EU citizens in the UK should be sufficiently protected, a solution should be found for the border problems between the two “parts” of Ireland, and a transition deal should be reached, which includes continued free movement and the jurisdiction of the European Court of Justice during the transition period). Interesting is that the Brexit threat - just like Trump's views on defence, trade and climate - seems to have focussed the minds of the European Commission and policy makers in the remaining EU countries on how to further strengthen the EU (13). Helpful in this context is the outcome of the French elections (the overwhelming victory of Macron) and the increased support for Mrs Merkel in Germany. If there is to be a Brexit (the probability is high but one never knows and the mood seems changing a bit in the UK) the negotiations will be extremely difficult. The model of remaining a member of the internal market is not acceptable for the British, because then they have to accept the so-called 4 freedoms (freedom of movement of goods, people, services and capital); the customs union option is not attractive, because then it is still the EU that is responsible for trade negotiations. Becoming a member of the European Economic Area (Iceland, Liechtenstein, Norway) will also be difficult to swallow. Although it does not involve membership of EU’s customs union, it implies freedom of movement to almost the same extent as holds for EU-members. I think that at the end of the day parties will show some flexibility and succeed in finding compromises, but it is quite clear that “Whoever wants to leave this family can not expect to shed all of its responsibilities but keep the privileges” (Angela Merkel). It is also evident that the process of disentangling the UK from the EU - this is something else than the 2 years negotiation period - will take many, many years. It might take a very long time, if ever, before the British, via increased autonomy, have made up for the losses they will suffer in the coming years, losses that range from loosing London based EU agencies (European Banking Authority, European Medicines Agency), to a weakening of its financial sector, and more generally speaking, the pressure on its gdp growth. Perhaps the biggest loss will be the UK’s weakened impact on the decision-making in the EU-area. This is the flipside of becoming more independent. The European economy seems large enough to absorb the setback of Brexit. Brexit might even give a positive impulse to the European integration process. Don’t forget: the British have been blocking for years in a row almost all initiatives to further strengthen the EU. That being said, an orderly and smooth Brexit should not been taken for granted. Andy Haldane, BoE’s Chief economist, recently qualified this as a strong assumption (14). I tend to agree with him. The disentanglement from the European Union indeed is a risky process, more for the UK than for the EU. In summary Brexit has not made life easier for the EU. Brexit is regrettable, but seems surmountable. However, it is not the only problem the remaining EU members are confronted with. Something should be done on the still existing, big divergences between a number of strong (mainly Northern) countries and the weaker/weak countries. If a transfer union is to be excluded - there is absolutely not enough support for such a union - the weak countries should address their problems mainly themselves, of course with some help of the EU and the stronger member states. A political union to force upon member states substantial transfers is, for the time being, not in the offing. That is not to say that we have not made a lot of progress during the last two decades (e.g. with the creation of a monetary union, a European Central Bank, a European supervisor and a banking union; furthermore we substantially strengthened budgetary rules and practices, showing up in a fall of the aggregate deficit from 6% in 2010 to 1.4% in 2017). But, admittedly, more progress is needed for the solid anchoring of the European integration project. In the coming years we should complete the banking union, the capital market union and further strengthen the internal market. It would also be wise to change the regulatory treatment of sovereign bonds so as to loosen the bank-sovereign loop. The French have floated the idea of creating a EU Ministry of Finance with a EU Finance Minister. It is too easy to say that they are showing little sense of reality; because at the end of the day it all depends on how much power you, initially, want to give to such an institution/person. I think in many areas further progress can be made. The real “at a crossroads” moments for Europe at this very moment are: how to deal with Brexit, how to address the problems in the weaker European countries, how to make further progress with the European project and how to further strengthen, more generally speaking, the credibility of this project. THE EUROPEAN CENTRAL BANK AND ITS POLICIES Unconventional monetary policies During the first years of the financial crisis the major central banks did, to my mind, a marvellous job. They have prevented a collapse of the global economy, by providing on massive scale liquidity to the banking system and by a very loose monetary policy. That was fine and dandy, but after a certain moment they started with so-called unconventional monetary policies. The main argument for central banks to start with these policies (forward guidance and broadly-based, large scale Quantitative Easing) was the danger of deflation, at a moment the policy rate approached the zero bound. In this context it is quite popular to refer to Japan. The long period of deflation in that country resulted in stagnation in the real economy. That is at least what many people think. With respect to the performance of the Japanese economy it is necessary to take into account demographics. “Given Japan’s unique demographics per capita gdp is equally, if not more relevant. On that basis Japan’s economy slowed markedly in the 1990’s. But between 2000 and 2013 cumulative per capita gdp growth was a respectable 10% compared with 12% for the US” (15). The Japanese consumption price level end 2014 was roughly the same (2% higher) as in the beginning of the nineties of the last century. During that period, inflation had its ups and downs, within a narrow band, and was more often negative than positive, but there was never real deflation. Deflation, negative inflation can indeed be dangerous if it is the (potential) beginning of a downward price-wage spiral as we have seen in the Great Depression. Then quick, decisive action is required. But our economies and societies are different from those in the 30s of last century. An interesting case is Greece. It took a 25% fall in GDP since 2008 before inflation entered negative territory (-1,7% in 2013 and -2,6% in 2014). In 2014, the year with the greatest negative inflation, real gdp growth hesitantly started to recover. Without denying that the present low inflation (core inflation in Europe fluctuates for some time already around 1%) should also be seen in the context of low demand for a very long period, other factors seem to play an important role such as the aging of our populations (affecting the savings behaviour, but also wages), the globalisation process (resulting in pressure on import prices), and technological developments (e.g. increased competition via the internet, cheaper production methods, etc.etc.). Technological developments might also have weakened the bargaining power of labour. In some area's we have seen spectacular drops in prices. It may well be that we are facing - worldwide - a long (er) period of low inflation. Fighting this low inflation environment by sticking under all circumstances to a fixed (close-to-2%) target can only through an ever looser monetary policy and will eventually - via bubbles in certain sectors of the economy - turn into a new financial crisis or inflation. Let me quote a statement of Herve Hanoun (2014), the then Deputy General Manager of the BIS: "In this sense, continued unconventional monetary policy, can buy more stability now, but at a price of lower average growth - by damaging the supply side of the economy - and greater financial instability in the future". And let me in this context also refer to a remark made in a speech a year earlier by Caruana, the General manager of the BIS: "If a medicine does not work as expected, it is not necessarily because the dosage was too low. Maybe instead the overall treatment, and the role of the medicine within it, should be reconsidered. Most likely something else is needed”. More flexibility seems needed Therefore, in order not to swim into the trap of too loose a monetary policy for too long a period, central banks would be wise not to commit themselves too strongly to a specific inflation target. They should not make deflation kind of a bogeyman (Marty Feldstein). Here I have especially in mind the Bank of Japan and the European Central Bank. ( Draghi: "Inflation should be at a sustainable path close to 2%”; “This is a legal obligation”). To my mind a better approach would be to introduce more flexibility by the introduction of a bandwidth for the inflation target of the central bank. More flexibility, especially downwards, would do more justice to the fact that we do not fully understand what is happening with respect to price developments (16) and might be confronted, for a relatively long period, with low or even negative inflation rates without any danger for a downwards deflationary spiral. Contrary to the ECB’ s self-imposed interpretation of price stability, the FED has more flexibility due to its dual mandate. The Japanese Central Bank, however, feels very strong about a specific inflation target. Introducing some flexibility with respect to the inflation target seems to me the more sensible because of the limited effectiveness of ultra loose monetary policies. All studies known to me illustrate that, depending of course on the country involved and the conditions at the moment of the start of such a policy, you need enormous amounts to get only a limited impact on inflation and growth. In Europe the recovery started already in the 2nd quarter of 2013, 2 years before QE, The implication of out-of-scale monetary policy operations is the danger of serious side effects. One of them is that financial markets become detached from economic reality. Linked to that is that central banks become the prisoner of financial markets, as they might become also the prisoner of fiscal authorities that can't afford higher interest rates. Unprecedented central bank policies, aimed at keeping interest rates as, low as possible, even negative, are driving up asset prices: bonds, stocks, paintings, real estate. It brought an analyst of Citi’s research department to the sigh: “Please don’t buy so many bonds, Mr Central Banker” (17). There are so many distortions nowadays in financial markets, that it has become almost impossible to assess the size of the risks: swap spreads are distorted, the yield curve can’t be used anymore as an indicator of future economic developments, traditional volatility indicators have become useless, etc. We are living in a period of broken indicators, which is risky. In Europe it is the ECB that has kept alive the very weak countries. It succeeded in pushing interest rates further downwards and in reducing spreads between strong and weak countries. This was crucial for the survival of the weak countries. But such a policy cannot go on forever, taking into account the side effects and growing exit-problems. At its June meeting the ECB closed the door for further rate reductions and it will, highly likely, run down its unconventional policies as of/ in the course of next year. Therefore, the ECB is at a crossroads, but even more so Europe, because without the support of the ECB the other authorities should finally deal with the still existing and even growing divergences. CONLUCSION The world is changing rapidly. The integration of new, big countries (China, India) in the world economy has an enormous impact on all players. This is because of the size of these new entrants and the speed of the process. Not everybody is enough aware of the consequences and it remains to be seen whether we are sufficiently prepared for this brave new world. The European project is, to some extent, an answer to the new circumstances. It is a unique experiment of countries giving up, step-by-step, part of their sovereignty to better cope with tomorrow's world. It is a process with many hick ups. Brexit is such a hick up and we will see more developments endangering the process. That said enormous progress has been made, in many areas. The British will experience, during the disentanglement process, how much integrated they already were and how much they are going to loose. Part of the progress made in Europe shows up in the creation of the monetary union. Europe survived the financial crisis with the help of its newly created central bank. There is no doubt in my mind as to that. Meanwhile the divergences between the countries remained or became even larger. The authorities should address these divergences and not overburden the ECB. But the central banks themselves - in Europe and elsewhere - should realize that, from a risk management point of view, they also have a responsibility and that is to say: "This is where it stops. Now the potential side-effects become too large”.

Jan van der Putten, 2017. “Botsende Supermachten”. In Dutch, but with many references to the international literature.
For years in a row this has been stressed, for example, by the European Central Bank in its press communiqués after meetings of the Governing Council.
Robert Scott, 2017. “Growth in US-China trade deficit between 2001 and 2015 cost 3.4 million jobs”. Economic Policy Institute. Numerous articles have been published on this issue.
Italo Colantone and Piero Stanig. July 8,2016. “The Trade Origins of Nationalist Protectionism: Import Competition and Voting Behavior in Western Europe”. Prepared for presentation at the EPSA 2016 meeting in Brussels.
Ronald F.Inglehart and Pippa Norris. August 2016. “Trump, Brexit, and the Rise of Populism: Economic Have-Nots and Cultural Backlash”. Harvard Kennedy School, John F.Kennedy School of Government.
B.I.S. Annual Report 2017, Chapter 6 (“Understanding globalisation”).
Judging by recent statements of Mrs Angela Merkel and other European politicians.
Wayne M.Morrison, 2 October 2015. “China’s Economic Rise: History, Trends, Challenges, and Implications for the United States”. Congressional Research Service 7-5700 (www.crs.gov)
Source: OECD.
Source: Eurostat.
International Monetary Fund. June 15, 2017. “Euro Area: Staff Concluding Statement of the 2017 Article IV Mission”.
Forward Together. Our Plan for a Stronger Britain and a Prosperous Future. The Conservative and Unionist Party Manifesto 2017.
European Commission, 31 May 2017. Reflection Paper on the Deepening of the Economic and Monetary Union.
In a speech on 20 June 2017.
John Plender, 21 September 2016. “At the Edge of the Shock. Japan’s Problematic Monetary Future”.
Claudio Borio, 25 June 2017. “How much do we really know about inflation”? Presentation at the 87th Annual General Meeting.
Hans Lorenzen, Citi Research, September 2016 (hans.lorenzen@citi.com).

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Nout Wellink: Europe at a Crossroads

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