INTERVIEWInterview with La RepubblicaInterview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Tonia Mastrobuoni on 14 November 2019In Germany, even though manufacturing is taking a hit, the wider economy, the consumption-driven part of it, is still in good shape.
Interview with La Repubblica
Interview with Philip R. Lane, Member of the Executive Board of the ECB, conducted by Tonia Mastrobuoni on 14 November 2019
- In Germany, even though manufacturing is taking a hit, the wider economy, the consumption-driven part of it, is still in good shape.
- Theres no doubt that, compared with 2017, theres been a sustained slowdown, but in the euro area we dont see a recession.
- Our baseline scenario is a recovery in economic performance, but we have been consistent in highlighting that theres also downside risk.
- The OECD said recently that Donald Trumps erratic trade wars might be the main reason for the global downturn, because they discourage investments.
- In recent weeks, compared with the worst-case scenario, theres been some optimism on the US-China trade relationship.
- A deal has been agreed between the UK Government and the European Union, which of course will be tested in the next election.
- The worst-case scenario of a no-deal Brexit in the short term has been eliminated and the uncertainty over it is fading.
- But even under the deal there is going to be a more challenging economic relationship between the United Kingdom and the EU27.
- There is a big discussion about the risk of a secular stagnation in Europe.
- You rule out a recession in the short term, but do you see this risk of a Japanese scenario in the long term?
- It remains a relevant discussion because the big question is: are we going to grow at a low rate of maybe 1% a year?
- Essentially, if the policy choices by governments are more favourable to economic performance, then some of this stagnation fear may fade.
- Do you mean countries that have a fiscal margin to use investments to boost growth, like Germany, should act?
- This is one of the potential gains from being a member of the European Union.
- We have seen many examples where, in a given country, there might have been an intense debate about a particular policy.
- But then a number of years later we see that a country which adopted a particular policy is succeeding.
- Once youre in the safe zone I think that fiscal policy can be conducted differently.
- For a long time the overwhelming focus was on how to make sure the high debt levels came down.
- But at some point that gear shift has to happen for those countries which have been successful.
- And many highly qualified young people choose France or Sweden or Germany because they earn much more.