A Trump administration will “probably lead to more protectionism”, “which means more inflation, at least in the United States, and a priori less growth everywhere in the world” according to François Villeroy de Galhau.
Donald Trump’s victory “increases the risks for the global economy”, said the governor of the Bank of France, François Villeroy de Galhau, on Wednesday, emphasizing the need for “European remobilization”. “I believe that the result of the American election increases both the risks for the global economy and the need for European remobilization,” commented the governor during a conference in Lyon.
A Trump administration will “probably lead to more protectionism”, “which means more inflation, at least in the United States, and a priori less growth everywhere in the world”, underlined the central banker. He also noted a likely higher US budget deficit and increased uncertainty, which also risks weighing on growth.
“The American election must sound the European awakening” after “a long numbness”, commented François Villeroy de Galhau, stressing that “Europe is approaching this new situation with obvious weaknesses”, including “technological delay” and ” political division.
In favor of the capital markets union in Europe
Tuesday evening, during an event organized by the insurer Axa, he had already called on Europeans to be “more American”, that is to say “know how to look at our assets and our strengths, and not just our weaknesses”. “We have strengths,” he stressed, listing “our businesses,” “our financial resources” and “our talents” and deploring the “tendency, in our media and political debate (…) to speak infinitely more of our weaknesses than our strengths.
Savings constitute in particular “a very strong resource in Europe” but “several hundred billion per year” of which are invested outside the continent, and “largely” in the United States, he said. The opportunity for him to insist on the need to “strengthen the channels between our savings and our investment needs” through a capital markets union (CMU). Such a project, which aims in particular to mobilize the private savings of Europeans in favor of the real economy and thus facilitate investments, has struggled to see the light of day for years within the European Union, due in particular to differences between France and Germany on its terms.
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