The Italian situation becomes more complex after the resignation of Prime Minister Guiseppe Conte. The Italian president didn’t validate the government Conte has presented to him.
In this possible government, Salvini, the leader of the League, had the Ministry of the Interior and Di Maio, the 5-star movement’s leader, the Ministry of Labor. These points were recorded.
The stumbling block was the Ministry of Finance, where Paolo Savola, who is very critical of the euro and the construction of Europe, was being approached. Continue reading
The lull in Italy after Conte’s appointment was short-lived. The 10-year rate is up sharply while the German rate retreats. The spread is increasing. The Salvona hypothesis for finance minister does not satisfy because of the systemic risk associated to him
Giuseppe Conte has been appointed Prime Minister by Italian President Sergio Mattarella. The next step is the formation of the government that will reflect the balance of strength between the 5-star Movement and the League.
1 – Conte is the lowest common denominator between the two parties of the coalition. He will not have much room for maneuver. Continue reading
After just one year it is still too soon to make a full assessment of the Macron presidency, so the question we must answer is whether the measures taken by his government over this first year are the rights one to tackle the changes we have witnessed worldwide.
In part 1 of this series, I outlined the need to make growth more self-sustaining, even in a context of ongoing globalization. I described the need to raise the innovation aspect in our investment, and the necessity of making the labor market more adaptable to better address change. Recent research by Gilbert Cette et al uses a broad international comparison to suggest that high employment protection legislation in France leads to capital-to-labor substitution. This would explain high investment levels in France. However, the authors note that the innovation component of this investment is inadequate and does not sufficiently bolster productivity. Another conclusion of the report is that a more flexible labor market means higher quality capital.
And this equation lies at the very core of the supply question in France: capital needs to be more efficient, while the labor market needs to be more flexible in its ability to adapt. I noted in part 1 that steps taken to support public investment along with government labor market decrees help ease these restrictions and promote an adjustment in supply.
But we have seen two other watersheds in the world economy that the French economy must now address if it is to further integrate i.e. the location of production and the location of innovation.
The second shift is the geographical location of production. Continue reading
The year ahead gives us a number of reasons to be optimistic that I would like to share with you. World trade has taken an upturn, oil prices remain reasonable, and business leaders worldwide have a positive take on their environment. So the starting point for 2018 is solid.
Growth, along with the ensuing employment, will provide an opportunity for all citizens to regain a foothold in a complex and difficult world. Economic policymakers will be responsible for adopting the right reforms to set the stage for a recovery that provides enhanced job creation and reduces uncertainty for each and every member of society. In this respect, France has high hopes on the reforms that will be debated in 2018: the reform to vocational training and job skills lies at the heart of the French government’s roadmap and the policies the authorities adopt in this area will provide the key counterpart to the labor law decrees in making the job market more efficient. Continue reading
European citizens are now optimistic on the future of Europe and they feel European. A survey published in a report this month by the Pew Research Center testifies to this, with favorable views of Europe increasing everywhere in 2017, even in the UK. The only country that saw a deterioration was Greece, but this is understandable given the austerity measures imposed on its citizens by the hefty economic adjustment process from Brussels. We can also read the French presidential election result as a referendum primarily fought and won on Europe.
The old continent is regaining greater political strength at a time when growth is also picking up speed. The planets are finally aligning and the outcome is positive. The region’s political environment is more stable and the risk of populism has dwindled.
In a complex, tough and unpredictable world, Europe is now a safe haven of stability, and this haven looks more assertive, particularly with Germany’s impetus.
We all heard Angela Merkel indicate that Europe should take its fate into its own hands as yesterday’s allies look less reliable and yesterday’s enemies are still there, and talking about the need to reform Europe, even if that means setting up a finance ministry and having a joint budget. Continue reading
The French presidential election primarily comes down to a political choice on the role that French voters want to give to France. The first round of voting showed that French electors were no longer very comfortable with the image they had of France. The traditional governing parties did not make it through to the second round of voting. There is a deep-rooted need for change and a desire to choose the path that French society will take. This malaise can be seen in the choice electors face on Europe – for or against – and this decision overrides all other electoral considerations. We cannot compare electoral programs if the question of European membership is not clarified. This is why the economic aspects of the candidates’ programs are not decisive and voting decisions will not be based on them. Indeed, there has been little talk of economic issues since the start of the campaign, with the candidates focusing more on the over-arching framework for the country.
The predominance of politics over economics was recently witnessed in the US presidential election and in the UK referendum on Brexit. Remainers talked essentially about the economic consequences of Brexit, while Leavers talked about the United Kingdom, its people and this people’s role in the world. The US presidential election followed the same pattern. Donald Trump did not come to power on the back of his economic program, which merely reflected the idea of less State intervention from a strong and reassuring State. It was a political vision of the US, taking on the rest of the world alone, that took Donald Trump to the White House. And these factors should make us stand back and think, not focus just on the economics. Continue reading