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Shock and renewal in Europe


4 April 2017, London

April Bulletin Cover 3

Europe’s leaders gathered on 25 March to celebrate the 60th anniversary of the signing of the Treaty of Rome. This month’s Bulletin summarises the challenges for Europe as it moves on from commemorating the past to overcoming the shock of the British decision to leave the European Union and renewing structures and objectives.

Roel Janssen argues that populism’s loss of momentum in the Dutch elections will influence other European polls. The most immediate one is the presidential election in France. Jean-Jacques Barbéris and Brigitte Granville reflect on the concerns of voters and the candidates’ economic policies.

Regulation, reforms and monetary policy remain key tenets as the European Community, now the EU, enters its seventh decade. Felix Hufeld highlights the need for balance between rules and principles in financial regulation. Hans Blommestein draws attention to the negative side-effects of easing policies on bond market liquidity, while Gary Smith presents the challenges for central banks in the context of future demographic shifts. Lorenzo Codogno focuses on the issue of minority shareholder protection and its importance in Italy’s efforts to attract foreign investment.

The British economy so far has been relatively undisturbed by the referendum result – but shocks may still be in store. The British chancellor may need to reassess his plans and impose new cuts, argues Vicky Pryce in her review of Philip Hammond’s first Budget. David Marsh draws attention to the political repercussions of a prospective second referendum on Scottish independence. Our monthly Advisers Network poll focuses on the likely outcome of the two-year negotiation period, with a small majority of those polled concluding that a deal acceptable to both the UK and EU27 will materialise.

The European Commission’s broad set of options for the future in its ‘five scenarios’ 60th anniversary document emphasises the lack of certainty over the journey’s direction and destination. The phrase ‘variable geometry’ – popularised during the 1990s – remains the best description of the continent’s present and future set-up.

Other highlights of the April 2017 edition:

  • Darrell Delamaide comments on the dovish noises behind the US Federal Reserve's interest rate increase.
  • Lord (Meghnad) Desai​ reflects on the history of monetary theory described in Sebastian Mallaby's biography of Fed Chair Alan Greenspan, ​The Man Who Knew​.
  • Sayuri Shirai ​critiques the dilemma between Japan's short-term monetary accommodation and a more restrained pace of easying that may last longer.
  • Carlos Giraldo writes on Latin America's positive economic backdrop.
  • Mthuli Ncube ​highlights the importance of interoperability of mobile banking models.
  • John Nugée ​reviews the reflections of Yanis Varoufakis on the euro area and Greek crises in ​And The Weak Suffer What They Must?​.
  • Danae Kyriakopoulou ​compares Varoufakis' work with that of George Papaconstantinou, as described in his book ​Game Over​.

The Bulletin is available to OMFIF members, and to non-members on a subscription basis. To subscribe please contact membership@omfif.org.