Discours de Pierre Moscovici à l’Université du Peuple (en anglais) [中文]
"Economic outlook for 2013 - France’s point of view" (8 janvier 2013)
Ladies and Gentlemen,
It gives me great pleasure to be here with you today, here in this outstanding university, meeting those who will build the China of tomorrow. I would particularly like to welcome the students who are here today ; I know they are studying for exams and that this is a very challenging time. I am pleased that they were able to find the time to take part in this discussion, and I would like to thank them all for being here.
A new year is upon us, and traditionally this is a time when we look back at our past efforts and turn our eyes towards what we will do in the future. This is what I would like to do with you today, in my area of expertise – economics – and then I will be happy to take your questions. I hope you will have many, and hopefully that some of them will be unconventional.
My reflections are the result of a point of view that is necessarily rooted in a specific time and place. It is the point of view of a Minister for the Economy and Finance – someone whose profession is completely devoted to political initiative, action and the transformation of reality. There is no place in this point of view – no place at all – for indecisiveness, passivity or dreamy contemplation. It is the point of view of a minister who was appointed in May 2012, along with a new government, and who must work with the economic legacy that was left to him. Above all, it is a French point of view. When one is a member of the G8, the G20, the 5th largest economy in the world, the second largest economy in the European Union, and thus at the very core of the world’s number one economic power (let me point out that the combined GDP of the EU’s 27 Member States is larger than that of the US), then one has specific responsibilities : to one’s citizens, naturally, but also to one’s neighbours and partners.
And when we know that some economists believe that the shadow cast by the euro area crisis represents the greatest threat to the world economy in 2013, we understand that France must face up to an increasing number of responsibilities with a great deal of courage, conviction and determination.
2013 will be a difficult year for the world economy – everyone knows this, but simply saying it accomplishes nothing at all. My task, as a politician and as the French Minister for the Economy and Finance, is to prevent France from merely bearing the brunt of 2013. My task is to rally France’s strengths, to bring all its weight to bear – especially in the European and international economic agenda – so that, given the limited room to manoeuvre in the new year, economic recovery for France, for Europe and for the world becomes increasingly possible.
For this to happen we must have a roadmap, a specific action plan. I would like to share with you my roadmap, and what 2013 will bring for a France that is fully aware of its responsibilities and its place in a globalised economy.
I. Before we get started, let me put a few things in context and say a word about Europe and the eurozone. Significant progress has been achieved in recent months, and particularly in the last few weeks. However, in a euro area that has been weakened but that is still vital for the world economy, 2013 will be a difficult year – and one that, more than ever, calls for great political will.
Europe is in the midst of a major crisis ; its origins are well-known and I will not belabour the point. I would simply like to point out that prospects in the euro area have improved these past few months. Its debt levels in the 2000s were excessive, but today they remain lower than those of other major economies (the United States, the United Kingdom, Japan) in terms of private debt. Its public debt is similar to the British and American economies and much lower than Japan’s. This does not mean that the situation is satisfactory and requires no effort – but I will come back to this point.
I would briefly like to speak about the decisions by European governments and the European Central Bank in recent months, because I believe that they represent a genuine turning point in the management of the European crisis, a crisis that has sent shockwaves far beyond Europe’s borders :
The “European Stability Mechanism” has been operational since the beginning of October 2012. This represents a historic step in the construction of the single currency, since it provides the euro area with a permanent firewall, and offers the possibility of direct recapitalisation of euro area banks without adding to the debt of Member States.
Europe’s handling of the Greek situation in late November and December paved the way for Greece’s long-term growth, and eased doubts about the cohesion of the euro area.
The agreement on integrated banking supervision, which was signed in December, will allow us to better handle financial risks in the future. The principle of the agreement was introduced by the European Council in June 2012, along with a full set of efforts to underpin the euro area.
At the same time, and this is vital, the European Central Bank has been deploying an intelligent policy for the past several months. Its new instrument for intervening in the bond markets, i.e. its "unlimited" sovereign bond-buying programme subject to certain conditions, sent an extremely powerful message on the integrity of the euro area.
There has been a real surge forward in recent weeks, and the turning point in efforts to restore stability and confidence. This forward motion has largely been the work of France and its new President. We are placing all of our weight behind putting euro area policies on an even keel, in order to give proper emphasis to the goals of growth, recovery and solidarity. My personal agenda, one-third of which is taken up with European issues, is a reflection of this.
These rebalancing efforts are crucial for Europe and its Member States, but also for its partners, and most of all China. China needs Europe if its economy is to grow : Europe is the number one export market for China, absorbing nearly one-fifth of exports. China has also made large-scale investments in the euro area, and a portion of its considerable currency reserves is in euros. This is the context in which President Hu Jintao, speaking at the end of the G20 Summit in Los Cabos last June, stated that the crisis in the euro area was a problem "of general interest". I share this view and appreciate China’s support to the eurozone, and I want to assure you that I am entirely focused on the issue. I would like to express my firm belief – a belief that is shared by President Hollande – that doubts over the continued existence of the eurozone are now behind us. The crisis is not over yet, but you should feel confident that Europe’s stability and ability to recover have been consolidated, with the full commitment of European leaders.
The initiatives that I mentioned earlier will bear fruit ; we can see this in the lessening of financial tensions with respect to certain euro area countries (France, I would like to point out, is borrowing at historically low levels – 2.07% for 10-year bonds as of early January). However, the economic outlook will not brighten immediately, and 2013 will be a difficult year for the global economy.
What exactly does 2013 have in store for us ? Economists’ views vary, but several major trends may be distinguished : global GDP growth will be lower than expected, and there will be a very gradual return to growth in advanced economies. The situation will remain poor in the euro area and in the UK, somewhat more favourable in the US, and supported by reconstruction spending in Japan. The fundamentals in most emerging and developing economies remain robust. As for China, economic growth may surge back in 2013, buoyed by a domestic demand underpinned by economic policies and restrained inflation. This bounce-back is expected to reverse the trend of slower growth observed over the past several quarters.
But let us keep in mind that there is a great deal of uncertainty in forecasts for the world economy. A few days ago, we did not know what was going to happen with America’s “fiscal cliff”. And what can we say about the elections in Germany ? Or fluctuations in oil prices ? What can we predict about the rate of growth in the US ? Or reactions to progress in the euro area, which by the end of 2012 was in much better shape, with new structural solutions to the crisis ? Faced with such uncertainties, I think that economists may think at times of the quote from Greek Philosopher Socrates, who once said, "All I know is that I know nothing". Whilst not going quite that far, economists and political leaders should certainly resist the illusion that they know and can know everything.
This uncertainty should not be confused with powerlessness ; rather, it is a call to determined action. For France and the euro area, 2013 will be a crucial year, one in which we must prepare to be more efficient and more competitive when the recovery – for which we are working so hard – finally arrives. It will be a year of fighting for employment, a year of reforms, and a year of action in the service of both the French and the people of Europe.
II. So how can we ensure, together, that we do not merely bear the brunt of 2013 ? The year should be a springboard for the global economy rather than a quagmire.
We must assume our responsibilities together - nationally, my thoughts obviously turn to France but also to the major emerging economies, such as China ; in Europe, as that is where the crux of the matter lies and globally, within the coordination and cooperation bodies in which the major powers work side by side.
Although in Europe, many economists are predicting sluggish growth in 2013, we need to concentrate our efforts to stimulate economic growth. There is room for manoeuvre, albeit slim :
Firstly, we need to specifically focus on fiscal consolidation strategies in the euro area, and ensure that they are tailored to the circumstances of each country. For France, the goalposts have not shifted - we intend to reverse the debt spiral as from 2014, slash structural deficits (everyone is aware of France’s initiatives and ambitious targets in this respect) and control public expenditure. I should mention that, when establishing our policies, we favoured consolidation initiatives having minimum impact on growth. In any case, we are fully committed to achieving our goals. But, in the euro area, as the international organisations and economic forecasting institutes are pointing out, there is a difficult balance to be struck between the need to reduce the short-term negative impact of fiscal consolidation measures on demand, and ensuring that plans for the consolidation of public finances in the medium term remain credible.
I agree with the IMF’s call for swift rollout of the decisions taken by EU Governments at the European Council meeting in June 2012. These decisions are essentially intended to breathe new life into policies to buttress growth. As an example, the European Investment Bank capital increase decided at the Summit will enable new investment projects within the EU to be funded (e.g. building new infrastructures or work to improve the energy performance of buildings). It is up to us to act on these opportunities and to consider possible initiatives at EU level to drive economic growth throughout the euro area.
Lastly, all the euro area countries should keep in mind the general interest of the economic and monetary union which has been achieved. Both countries running deficits, which need to introduce urgent reforms and cut spending, and those with surpluses, which can use their breathing space to foster investment or support domestic demand, should be actively involved in the economic recovery of the euro area.
France will assume its responsibilities whilst respecting the timetable for reforms which have been proposed or already launched. René Char, a French poet who I admire, said that “Lucidity is the wound closest to the sun”. France is lucid both as regards its strengths and the need for modernisation. The country can boast a large and diversified economy, a privileged location at the heart of Europe, a well-trained workforce, high-quality infrastructures and one of the most favourable fiscal regimes in Europe for R&D activities conducted by companies. Building on these assets, the French government has demonstrated a strong commitment to reforms. Highlights of its 2013 reform programme include the further downsizing of structural deficits, the completion – before the end of the month if all goes well – of an unprecedented reform of the labour market, aimed both at ensuring the security of career paths and jobs and enabling firms to weather economic downturns, “Government modernisation” geared towards cutting general government expenditure whilst boosting the effectiveness of public policies and, finally, blanket implementation of the decisions contained in the “Competitiveness Pact for Growth and Employment”, adopted by the French Government in early November and putting forward 35 measures to rebuild France’s competiveness.
So 2013 will be a busy year both nationally and at European level.
But the scope of the economic measures being implemented in France is not restricted to national or even European frontiers. I firmly believe that the problems faced in 2013 will be more easily tackled if we step up cooperation with the major emerging economies, such as China, both bilaterally and within global institutions and forums.
This is the main reason why I have chosen to come to China. It is my first official visit of the year and the first in Asia. My choice was not random.
Bilaterally speaking, it is news to no one that China has great potential to drive the global economy. Especially as it is currently refocusing economic growth more on domestic demand. The results of this shift are clearly seen by the reduction of the Chinese current account surplus. This is driven by the momentum of household consumption which jumped by almost 10% in 2012 (according to the OECD).
At the meetings I had yesterday and today with the Chinese authorities and with investors, I mentioned the paths which France and China could take towards more in-depth cooperation, for our mutual benefit, at a time when France’s trade deficit with China is almost 27 billion euros (nearly 40% of its total trade deficit). This cooperation could involve establishing balanced industrial partnerships or increasing cross-investment. The time is ripe for reinforcing, bolstering and better structuring our bilateral relations in a way which bears witness to the increasing closeness of our ties and our countries’ respective weight on the global economy.
That being so, there should also be improved and strengthened discussions in the multilateral decision-making and economic coordination bodies and forums. France and China are not isolated and this is why, besides the bilateral issues that I have just mentioned, at my meetings with the Chinese authorities and leading stakeholders, I talked about our two countries’ joint responsibilities in terms of global governance.
We have to move forward together, whether in terms of global imbalances which are being gradually corrected with the support of the Chinese authorities, the G20’s work at a time when Russia is assuming its Presidency and when our two countries agree on certain strategies - fostering strong and sustainable growth, promoting long-term investment, continuing the move towards improved financial regulation and market integrity, etc...
There you have, ladies and gentlemen, the French outlook and point of view that I wanted to convey to you for this new economic year. Whilst keeping a clear head, politicians must always remain reasonably optimistic. And they need confidence, not just for them because there is no successful action in the economic realm if confidence is elusive. And it is my responsibility, as Minister for the Economy and Finance, to build and inspire confidence in my country, and in France’s economic partners. Well, I do feel confident. I am confident in our collective ability to overcome the crisis the global economy is going through. I am confident in the eurozone : it has hit a rough patch, but it will emerge from the crisis as a steadier and more efficiently-regulated area, and with a stronger leadership. I am confident in my country, its culture and its strong and resilient economy. There are clouds on the horizon but there is also a wealth of possibilities. It is up to us to strive for a better, brighter future.