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EUROPE: THE CONCERNS OF JUNEs 1914 AND 2014…
On June 28th 1914, Archduke Franz Ferdinand and his wife Duchess Sophie received fatal gunshot wounds in Sarajevo, Bosnia. There ensued a whirlwind of communication errors, enabling the heads of state of Austria-Hungary, Germany, Russia, France, the United kingdom and Serbia to declare war 37 days later, on July 27th 1914. World War One lasted till November 11th 1918: 65M men fought, 8M killed (my grandfather, buried in France, is one of them), 2M died of illness and disease, 21M wounded, 8M taken prisoner or went missing in action, 7M civilians killed. The cost to all the combatants was unmeasurably high.
On June 27th 2014, the heads of state of Ukraine (46M citizens, GDP USD$168Bn), Georgia (4.5M citizens, GDP USD$15Bn) and Moldova (3.5M citizens, GDP USD$7.5Bn), took a big step toward closer ties with the EU as they met in Brussels and signed i) Association Agreements (deepening political and economic ties) as well as ii) free trade agreements (offering business access). This is a symbolic and historic moment for all three countries as they walk down the EU integration road. European Council President Herman Van Rompuy said that 'future generations will remember this day.' I am sure they will. But now the trick is, can they emulate Poland, the recognised EU integration success story? Read all about it in next month’s EU Insider.
The business takeaway is that the EU continues its inexorable expansion, adding a further 55M citizens and USD$25Bn to our common peaceful, sustainable future in the world’s largest single market. The cost is measurably low. Click through to the informative EU External Action pages, where there are really useful papers on each of the three countries, their relations with the EU and hence business opportunities for you.
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EUROPE: THE GDP STORY, GOOD BUT REMAINS PATCHY…
Today our concerns, happily more prosaic than June 1914, are for significant and sustainable EU GDP growth in the 28 EU countries. In 2014, we expect 1.6% for our >350 million EU citizens! Leading the GDP pack we have Latvia and Lithuania both at >4%. The most important number is Germany +1.8%, whose economy represents >30% of the 18 country Eurozone, but the big drag is France (see article below), as well as Italy, Finland and Greece all at <1%, and don’t forget Croatia (-1%) and Cyprus (-4%). The UK, outside the Eurozone, boasts twice the average with a respectable +3.1% GDP growth.
So what does the much maligned European Central Bank (ECB) have to say as differing demands are made upon it by Germany and France who lead different camps of opinion. Communications are better these days, with the governing council seeking to manage deflation as well as a weaker Euro (that helps exports but makes imports more expensive), with an exceptional package of –ve interest rates and €400Bn in cheap loans, a bargain at the price for all concerned.
If you want further information from a dependable source go to the ECB’s Statistical Data Warehouse (it really is) with the most recent 06.2014 Monthly Bulletin of 27 pages (if you really want it) or the 1 page brief.
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FRANCE: NOT WORKING AND A FLAWED DEMOCRACY (THE EXPLANATION?)
“The French business climate degrades in June 2014”, states the French National Institute for Statistics and Economic Research (INSEE), coupled with continued bad economic (zero growth in Q1, same expected for Q2) and political (confidence in President Hollande <17%, an all-time low, ex-President Sarkozy is back in court on corruption charges) news is the staple diet from France. Unemployment (a new high >3.3M), regular strikes (including air, rail, taxi as well as actors!) and an extraordinary letter to Hollande and his Prime Minister Valls (dated the 29th June 2014), uniting the 8 leading business/employers organisations of France, demanding urgent reforms. Having done nothing for the last 2 years, Hollande is on record as stating that he awaits the rising tide of economic cycles that will lift all boats, including France’s. Others argue that France cannot change course as there are too many powerful socialist vested interests and the historical devaluations of the French Franc are no longer an option, so doing nothing makes total sense. Expect more of the same and you will not be disappointed.
This presents a problem, not only for the French. As one of the big three Europeans (Germany, UK and France) the country is supposed to pull its economic and political weight and much more. France is now the recognised weak link and this has implications throughout the EU.
As always, I ask why? This month the Economist Intelligence Unit (EIU) “Democracy Index”, downgraded France (again!) to a “flawed democracy” due to “poor functioning government and political culture”. This points us in the right direction. For those of us who know and love France, we recognise the truth in that assessment. My bottom line explanation is that French central government does not work. Why? Well take a good look at the current leadership. So nor does the rest of the country. Getting back to reliable (depressing) stat’s for your business in France, you will find what you need at INSEE
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TTIP: WORK VERY MUCH IN PROGRESS
Preparations for the sixth round of negotiations, will take place in Brussels, Belgium from July 14th-18th 2014. Stakeholders are invited to participate. On the table we have manufacturing, agriculture, services, investment and public procurement and rules related to small and medium enterprises (SMEs). So if you feel concerned get down to the Management Centre Europe, Rue de l’Aqueduc 118, 1050 Brussels on the July 16th and express yourself!
I was in DC the June 18/20th, attending the inspired (US) State International Development Organisation forum, where TTIP was very much on the agenda of the well informed attendees. One evening, the accomplished EU Ambassador to the U.S., João Vale de Almeida hosted us at his residence during which I was able to ask his view on some of the larger concerns, beyond his impending retirement in October 2014, facing TTIP. The overall takeaway was fear of inertia on both sides of the Atlantic where stakeholder beneficiaries (hence the above invitations) remain idle and voiceless, hence his admirable feat of presenting TTIP in all 50 US states.
In Europe, we see increased TTIP communications by the US Commercial Services, (as well as those of a number of EU states). This is led by the recently arrived U.S. Ambassador to the EU, Anthony L. Gardner who declared TTIP amongst his top priorities. Will he visit all 28 EU countries, presenting TTIP? I challenge you Ambassador, do it. And I will let the EU Insider readership know. If you want the US perspective on TTIP, this is a great read:
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