Summer is here at last in the South of France and with it the tourists come flocking.
While within the leadership of the European Union all the talk is about austerity, here there are no signs of belt-tightening just yet – but everyone is preparing for the worst.
“We’re going to be able to go on holiday less often, like all Spanish people, but I can’t complain because I was able to come here today.”
The bill left by the banks sticks in the throat of many Europeans, especially since state finances are in such a bad way:
“We have studied science and we would like to move on to research. Unfortunately there really isn’t enough money. We are even asking ourselves: should we emigrate abroad or not? It’s true we are pretty worried about the future.”
“I hope the future of my son who is here… will be more prosperous, that there will be a better future for him.”
A prosperous future is what the “Cercle des économistes” sought to plan for at its big annual meeting in Aix en Provence.
The organisation is run by 30 French academics of different political leanings and this year they brought together no less than 137 speakers from 24 countries – economists, industrialists and politicans – to talk on the theme “In search of new sources of growth”.
Michel Barnier, European Commissionner for Internal Market and Services: “The seeds of this new growth have been planted in green technologies, in innovation, and education. The challenge is to see them bear fruit on the arid ground of austerity.”
“We did it with agriculture 50 years ago, we need a similar shared action plan for industry and research.”
“We must also speak to people, to our citizens and to businesses, about an economic project, a new offer of growth and employment. That will come through more investments in the long term, in infrastructure, and by greater support for education and research.”
But how will it be possible to finance such an investment when the accounts are in the red?
The reply from the “Cercle des économistes” – by creating a European debt agency which would fund large scale loans on an EU-wide level.
Christian de Boissieu, Cercle des économistes: “Europe cannot fall into the second division, because as with football, when you go down into the second division, it is fairly difficult to get back up into the first.”
Christian de Boissieu is an adviser to the French government.
“Borrowing isn’t the same thing as printing money.
“It is a question of recycling savings. And of course the European Central Bank doesn’t have to be directly involved in the operation; it would be better, even, if it wasn’t. It doesn’t need to be worried about it either.”
It has to be said that the ECB hasn’t hidden its reticence at the prospect of the European Union further indebting itself.
Jean-Claude Trichet, European Central Bank:
“I have no a priori position in favour of such a measure.”
“We are in a period where we have to manage all our budgets very carefully. Call it rigour, I have no problem with that, austerity, rigour… I call it good budgetary management, a management which is of course rigorous.”
What the proponents of a large European loan fear more than anything is a veto from Berlin. Because virtuous Germany doesn’t want to pay for the excesses of its neighbours.
“I think that the Germans… first I think they need to understand that to have poor growth expectations for virtually all European countries is not good for them either, it is not good for the eurozone. The markets speculate when they think there will be weak growth, so it’s a way of killing off that speculation. I think that we need to explain to the Germans that they win out of this because everything that kills off speculation is a good thing for them.”
And against speculation, the other indispensable tool is regulation on a worldwide scale.
Pascal Lamy, Director, World Trade Organisation:
“Toxic animals are better controlled than toxic financial products!
“There needs to be worldwide regulation. It doesn’t exist, it is probably being put in place little by little. It’s not impossible, you simply have to know that relative to what you can do within a national arena, it’s much longer and much more complicated. That’s one more reason to start straight away.”
Unless action is taken, an economist who predicted the current financial crisis four years ago doesn’t have much confidence in today’s fragile recovery.
Nouriel Roubini, economist: “We are not adressing the fundamental causes of the last crisis and we might be planting the seeds of the next one.”
“So I worry about this combination of still lax supervision and regulation, easy money and credit and very loose fiscal policies. It will lead eventually – not this year, not next year, but in the next three years – it will lead to more financial instability.”
Anne Glémarac, Euronews: “Gamble today on the European economy’s capacity to bounce back tomorrow – that is the challenge that the “Cercle des économists” has laid down to Europe’s leaders.
“In the hand they are playing, they have one strong argument: only the prospect of a feast in the future will convince Europeans to accept a diet today.”