Trade wars, the US election and Brexit: Jean-Claude Juncker on geopolitics and the future of Europe

Watch the highlights of our exclusive webinar where Jean-Claude Juncker, former President of the European Commission, shared his insights on the European recovery, international trade, how to tackle the climate crisis and more. He was joined by AXA IM CIO – Core Investments, Chris Iggo, Global Head of AXA IM Core Hans Stoter and Senior Economist and Asian Fixed Income Product Specialist Aidan Yao. Together they gave their views on the outlook for Europe and some of the potential opportunities and challenges for investors.

Jean-Claude Juncker, President of the European Commission from 2014 to 2019, shared his views on Europe’s economic outlook and its relationship with the rest of the world, with AXA IM clients in November. Below is a summary of what he had to say.

Europe’s economic recovery post-COVID-19

As well as the pandemic, we have to deal with a severe economic crisis, a geopolitical crisis, a social crisis - and a budgetary fiscal and financial crisis. And we have to deal with these different elements in different ways.

While health policy is a matter of national domestic responsibility, the European Commission is playing a major role by having negotiated contracts for coronavirus vaccines with different international companies, making sure all European countries and citizens will be given an opportunity to have this vaccine.

The European Union (EU) has also put in place a €750bn recovery plan in order to support European economies and domestic policies through the crisis, but there are delays to this plan being agreed as Hungary and Poland are currently opposing it. Negotiations are under way, and I think before the end of this year there will be an agreement.

The EU budget for the next seven years, starting 2021 is equally important. We have to make sure the money will not be spread around like helicopter money, and will be put in place, to restructure reforms, to develop innovation and improve digitalisation for member states.

We have experienced a severe economic slowdown. In 2021 there will be an economic recovery but not that will bring us back to a pre-crisis situation.

Unemployment is increasing but the EU has put in place plans to help member states. Unemployment was at a record low between 2015 and 2019 but numbers are increasing, which is leading us to a social crisis -a recovery plan needs to be put in place.

International relations and trade

We now have a new incoming administration in the US. When Joe Biden was declared the winner of the Presidential election, it signalled that the US is re-entering the national community. The atmosphere has changed as Biden has declared he would like the re-enter the Paris Agreement on climate change.  And climate change will be of paramount importance.

International trade is important for the EU, as millions of jobs are directly dependent on it. We have to pursue trade arrangements with as many countries as possible. China is of strategic importance for the EU but it is not always in line with international standards. It favours state-supported companies and we have to make sure trade between China and the EU is fair.

We are also facing Brexit and negotiations are underway. The British have taken this decision and it has to be respected, but the negotiations are difficult and we need a level playing field when it comes to companies in the internal market.

Future challenges – digitalisation and climate change

In Europe we need to concentrate on the digital agenda – and the commission has proposed an agenda for the digital sector; the Digital Services Act. I think in this area we need to accept we are weak, we are not strong enough and this has to be repaired.

After the end of the pandemic the climate crisis will still be there, and we need to focus our attention on carbon neutrality for the coming decades. I think that public budgets need to support the efforts made by private companies to fight the climate crisis and we need to combine our efforts from the public policymaker side and on the private company side. The pandemic is a moment in our short-term history, and climate change is a major threat for the future of humankind.

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