Conference Presentation, Panel, Fireside Chat
2014 London Summit - Europe: Still at a Crossroads
- Howard Shore expects economic problems in France and Italy to worsen, necessitating structural reforms for European improvement, while predicting sanctions on the Ukrainian crisis will further slow German exports and exacerbate the regional economic situation.
- Shore asserts that if a resolution is reached with Putin, sanctions could be withdrawn to stabilize the EU economy in the short term, and anticipates that the UK will retain full trade access to the EU even after leaving the customs union.
- Regarding the UK's potential departure from the EU, Shore calculates the fiscal transfer to Brussels at £8–£9 billion, rising to over £10 billion if the EU budget is approved, and notes a trade deficit with Germany exceeding £30 billion; he predicts Germany will avoid a trade war and reject fundamental treaty renegotiation to preserve the UK as its largest export market.
- Shore believes the German automotive industry would demand a free trade deal within 24 hours of a UK exit and that the UK will require new agreements on the free movement of people and legal supremacy to succeed in a referendum.
- Gerard Lyons forecasts that confidence in Europe will not see an immediate boost and that the ECB must expand its balance sheet beyond its current size (twice the European economy) to address deflationary pressures and low demand, despite German opposition.
- Lyons expects interest rates in the UK and Europe to remain low, potentially peaking at a low level, with a potential rise to higher levels only seven years in the future, while noting the Bank of England's balance sheet is over four times the size of the UK economy.
- Lyons anticipates the euro will depreciate as the ECB balance sheet expands and predicts quantitative easing will have only a marginal impact on Europe's structural issues, though he remains bullish on the long-term global economy while viewing Europe as the "slow lane" for recovery.
- The host predicts Germany needs increased domestic spending to address demand, while the UK must resolve a "balanced economy paradox" where core nations do not spend and periphery nations are forced to balance their books, and expects bank lending to eventually improve after asset quality reviews.
- Gerard Lyons suggests UK sterling will be heavily influenced by the upcoming election and a current account deficit of 5.2% of GDP, though he foresees the UK economy performing well over the next 20 years if it adopts sensible global-oriented policies.
- Helena Morrissey projects the EU's share of global GDP will decline from 37% to 22% by 2025, citing an "old-fashioned and inappropriate" political construct that impedes post-crisis action and argues the UK must address regional training deficits to prosper outside the bloc.
- Morrissey believes the UK is better off leaving the EU as the current model is a relic of the past, predicts a Miliband election win could be an "unmitigated disaster," and warns the UK's financial sector will face new regulatory challenges driven by eurozone concerns.
- Nigel Farage predicts the Eurozone will dissolve and the European political project is "doomed to fail" or experience a "slow, long, lingering death" without fundamental treaty change, arguing the "United States of Europe" aims to abolish nation-states.
- Farage expects the EU model to collapse due to the inability of "Club Med" countries to fit within an optimal currency zone and fears France is sinking, potentially leading to a Marine Le Pen presidency characterized by protectionist, socialist policies.
- Farage anticipates that if the UK leaves, trade access penalties will be fantasy due to the mutual dependence, and believes the "acquis communautaire" prevents member states from altering employment, health, safety, and environmental laws.
- Farage predicts the current 30% of votes for anti-European parties indicates leadership will ignore democracy and forecasts the German Alternative for Deutschland will grow as Euroscepticism rises, while expecting the "sick child" of Europe to die without political intervention.
- Helena Morrissey expects global winners with international markets to be favored for investment in Europe and believes the UK will do well post-Brexit if it articulates a clear vision for its place in the changing global economy.
- Gerard Lyons expects the public to question the status quo if structural reforms do not yield visible results and warns that periphery countries are balancing for political reasons while core countries do not spend, creating a divergence in the European economy.