Conference Presentation, Panel
A Continental Wake-up Call: Challenges and Opportunities for a Post-Brexit Europe
Milken InstituteMichael Klowden, Stephanie Flanders, Tina Fordham, Michal Krupinski, Lord Mandelson, Michael O'Sullivan, Mark Wilson
- Eurozone growth is projected to reach close to or exceed three percent this year, a scenario previously considered unlikely.
- Europe faces a potential "doom loop" of bad politics and economics, though it remains unconfirmed whether this has transitioned into a virtuous circle.
- The EU27 anticipates Britain will achieve sufficient progress to move from phase one to phase two of negotiations by the next European Council meeting.
- The UK Prime Minister intends to present trade outcomes to Parliament next autumn, contingent on securing cabinet unity.
- Internal Conservative Party divisions regarding trade alignment are expected to persist during the second negotiation phase, creating significant political hurdles.
- A failure to reach a substantive trade deal risks damaging the British economy, while changing course risks fracturing the Conservative Party.
- Without a deal, Britain defaults to WTO rules, which exclude services coverage and are characterized as the worst possible outcome.
- Small European states may form new political groupings to compete with the EU, while a common EU fiscal policy could force smaller economies to sacrifice flexibility.
- The "Global Britain" template is viewed as largely empty, with suggestions to adopt a Swiss model focused on intangible infrastructure.
- Mainstream candidates are leading in France, Germany, and the Netherlands, rendering a "Frexit" unlikely, while populist parties are predicted to finish second or third.
- Angela Merkel is expected to secure a fourth term, though her political capital is considered diminished.
- Italy's slow economic growth may fail to improve living standards, with low institutional trust expected to be the decisive variable in upcoming elections.
- If Central and Eastern Europe shifts toward protectionism, its political influence may not dictate outcomes, and its citizens currently lack faith in the UK.
- Poland exports 6.3 percent of its total volume to the UK, and the region may "step aside" from a community of sovereign states if the EU becomes more protectionist, though a "Pol exit" is not an option.
- No European political party, including Italy's Five Star Movement, is expected to propose a UK-style in-out referendum.
- Migration remains a significant challenge for Europe, with 60 million forcibly displaced people globally, and AfD support in Germany stems from eastern border areas with few migrants.
- Europe risks misinterpreting a cyclical economic uptick as a fundamental trend while China, Japan, and the US compete for 46 percent of the global economy.
- Currency market volatility is anticipated next year for the Swedish krona, Eastern European currencies, and the pound.
- The US is expected to diminish its influence within Europe as its administration moves away from engagement.
- Negative news from Trump and Brexit may compel EU governments to hold together and strengthen Eurozone arrangements.
- A future recession is not expected to be led by Europe, which possesses lower consumer and corporate leverage compared to imbalances in the US and China.
- Next year is forecast to be a significant turning point for the ECB regarding inflation and adjustments to the ending of the QE programme.
- Germany has a "once-in-a-generation" opportunity to partner with Macron on serious reforms in France.
- Emmanuel Macron's essential tasks include driving French reforms, solidifying En Marche as a permanent movement, and leading Europe with Germany.
- The interplay between monetary and fiscal policy across Eurozone countries will be the primary determinant of success over the next four to five years.
- A new generation of leaders under 50, including Macron and Sebastian Kurz, is expected to address automation issues neglected by older generations.
- The UK Government and Opposition are expected to eventually recognize that a "pro-business" stance is fundamental to economic growth.
- Resolving current issues could lead to a favorable future for the UK through trade deals with the US, Japan, and China.
- The French public remains in a "wait-and-see mode" regarding proposed changes, while the far right and far left have lost momentum and traction.
- The new German government is expected to resemble a "grand coalition" with Social Democrats rather than a "Jamaica-type coalition."
- Seven out of the ten biggest listed companies are anticipated to be related to the Fourth Industrial Revolution.
- The rules of politics in the West are predicted to shift from a left-right dynamic to an "insiders and outsiders" dynamic this century.