French Finance Minister Bruno Le Maire wants to reaffirm “a very aggressive message on European sovereignty” at the IMF and World Bank spring meetings taking place this week in Washington.
In his view, the European economic model is resilient to the current macroeconomic situation, marked by slowing global growth and persistent inflation affecting the more fragile countries.
On Tuesday 11 April, before flying to the United States, Mr Le Maire defended before a few journalists the importance for Europe to strengthen its competitiveness and its “technological independence”, by establishing on European territory the value chains of tomorrow’s ‘green’ technologies (electric batteries, semi-conductors, heat pumps, solar, wind, green hydrogen) in order to accelerate the decarbonisation of the economy.
He also highlighted the successful European financial supervision system, recalling that the Basel Committee’s international banking prudential standards apply to 2,300 banks in Europe, compared to only 14 systemic banks in the US. The strength of the European banking model must be defended “against attempts at deregulation”, he stressed.
On the same day, the IMF painted a picture of a global economy in “a broad-based and sharper-than-expected slowdown”, with high inflation, tightening financial conditions, Russia’s invasion of Ukraine and the continuing Covid-19 pandemic weighing “heavily” on the economic outlook. It projects global growth to fall from 6% in 2021 and 3.2% in 2022 to 2.7% in 2023, the lowest projection since 2001, excluding the global financial crisis and the acute phase of the pandemic.
These macroeconomic considerations echo the position stated by French President Emmanuel Macron on Tuesday in The Hague, during an intervention at the Dutch Nexus Institute (see other news). Mr Macron called for an “economic doctrine” so that Europe could choose its partners, without depending on them, and shape its own future.
This doctrine is based on five pillars: - competitiveness through reform, innovation and a deepening of the internal market; - an industrial policy to stimulate the development of the ‘net zero emission’ industry of tomorrow; - protection of people, content and critical infrastructure; - reciprocity in trade to promote high social and environmental standards; - revitalising the multilateral framework, including the WTO, to resolve conflicts.
This new economic doctrine will make it possible to reconcile the financing of the European social model, to face the climate challenge while being able to be more sovereign, he said.
The French Ministry of Finance insists that Europe must chart its own course, the starting point being the historic alliance with the United States. “There is no aggressiveness towards anyone”, said a source at Bercy, convinced that one can be both “allies of the United States (without being) against China”. In Mr Le Maire’s entourage, they do not believe in the economic “decoupling” of Europe from Beijing because of the importance of bilateral trade. Nevertheless, “Europe must defend its interests” by reducing its economic dependence on China and “this assertion of European independence is not against anyone, because it is also in the interests of the United States”, the source said.
Furthermore, Mr Le Maire expressed his concern about the continuing rise in prices. “The margins of companies must not feed this inflation”, he said. This is the meaning of his letter to the major French companies asking them to pass on the expected drop in wholesale prices to retail prices.
In the face of inflation, it is also necessary to support countries in difficulty, via international financial organisations (exceeding the threshold of 100 billion dollars for the recycling of SDR securities by the IMF), in order to counteract the risks of “political destabilisation” and “mass immigration”, said the Minister. He also called on national development banks to “change their role” by lending more, participating in collective projects and acting as a lever to mobilise private funds. (Original version in French by Mathieu Bion)