"L 'Donald Trump's election must be a spur to Europe so that it can act quickly, as it has often demonstrated when faced with crisis situations", said the President of the ECB Christine Lagarde, speaking at a round table at the World Economic Forum in Davos.
Lagarde: “Europe faces an existential crisis, must respond to the challenge”
Answering a question whether Europe is facing an existential crisis, Lagarde responded “with respect I think so”. “Europe must act and not just do it in defense – he continued – but, using sports terms, playing, even in attack, making use of the assets and strengths available”. And this means – he explained – putting large investments into play using the great savings capacity of European citizens that is now often directed towards non-European markets.
“Europe must respond to the challenges of the moment which represent both a risk and an opportunity,” he reiterated, then listing the strengths of the old continent: “I am in the week before the monetary policy meeting so I will limit myself to underlining the strengths of Europe which has an average debt/GDP ratio of 80%, a deficit of 3% and inflation of 2,4%. There is strong confidence that inflation will fall instead of rising. Interest rates are at 3%. Europe has a huge amount of talent and savings, but it needs a big wake-up call to act. If European leaders work together and respond to external threats, there is huge potential to respond successfully.”
"This is a wake up call that we must take seriously to give a concrete response”, the president of the ECB added. “In the United States there was the IRA (Inflation Reduction Act) with significant subsidies to attract investments, but now these subsidies have been removed. This leads to a rethinking of costs and opportunities. What is happening represents a challenge, but also an opportunity for Europe to rethink itself. Europe can become a major global player thanks to its talent and its ambition”.
Lagarde on Trump's tariffs: "We need to sit down at the table and negotiate"
Regarding the threat of tariffs, “Trump is looking at the trade deficit between the United States and Europe especially on products. But we must look at goods, services, the capital account, It can't all be black and white. There must be negotiations, commercial relations in a framework that gives trust to partners. We cannot remove rules,” said the number one of the Eurotower.
“We must work together,” he continued. We must therefore sit down at the table and negotiate., where some will have positions of greater strength, but you can't go it alone, because you have to respect and understand others. I will never tire of emphasizing the strength of institutions. Institutions have great value and frameworks are there so that players know the rules. There is value in having frameworks, because the best can then win, but within a shared set of rules”.
Lagarde: “We must complete the Union”
Europe is not a myth, it is not a sum of many different things but it is a great example of something in transformation. Certainly if Europe finally had a single market, it would eliminate, as an IMF study found, 40% of internal tariffs on goods and 110% on services. So the message to the leaders of the Union is to get moving and finish the job,” Lagarde said in response to the words of the CEO of BlackRock Larry Fink, CEO of BlackRock, according to whom Europe is a myth rather than a reality because 15 years after the sovereign debt crisis it is still significantly behind the American economy.
