The Sound of Economics

Cohesion policy remains a contentious topic in the EU, central as it is to the matter of convergence between regions. The need to share economic growth throughout the bloc is particularly acute in the wake of notable electoral advances from several more populist political parties in Europe in recent years. Bruegel senior fellow Zsolt Darvas explains how his recent study, co-written with Jan Mazza and Catarina Midões, adopts a new methodology with the aim of avoiding the complicating factors that have underpinned the greatly varied results of many previous assessments of cohesion-policy effectiveness. He explains further how the EU might refine its implementation of cohesion policy, and looks ahead to what might be the biggest obstacles to improvement. For further reading, we recommend the Bruegel Policy Contribution at the centre of this Deep Focus episode, ‘How to improve European Union cohesion policy for the next decade’.

The next presidents of the European Commission, Council and Parliament will inherit a relatively healthy European economy, but will face three formidable challenges in the next five years.   First, the incoming presidents must define Europe’s place in an increasingly bipolar world driven by a geostrategic rivalry between the United States and China. Second, global warming is a reality and temperatures appear to be rising faster than forecast. Third, the three presidents need to manage the economy and EU cohesion.   In this episode of ‘The Sound of Economics’, Bruegel director Guntram Wolff speaks with Bruegel deputy director Maria Demertzis about the specific measures that the new incumbents should take to tackle these challenges.   Together with senior fellow André Sapir, the two discussants have co-written Bruegel’s memo to the three new presidents, elaborating on the policy priorities for the next institutional cycle.

In this episode of 'The Sound of Economics', Bruegel senior fellow Georg Zachmann continues the Backstage series with an interview with Massimo Tavoni, professor at the Politecnico di Milano and director of EIEE. The discussion point is climate modelling - specifically its use and the necessity of complexity in some of its formulations. Some climate models are very straightforward, and this allows for the building of a solid base. But interaction between complex systems requires consideration of a multitude of factors, not all of which are easily measurable. Modelling can be productive as a means of plotting a route to a policy goal such as the Paris Agreement. And the outcomes are best viewed as producing only one of many possible routes that could be taken. These models are increasingly relevant for numerous sectors, all beginning to factor in not only climate change but climate-change policy. If you are interested in more on this topic, we recommend the Bruegel Blueprint co-written by Georg Zachmann with Grégory Caleys and Gustav Fredriksson on the distributional effects of climate policies.

The European Union's next framework programme for innovation and research - 'FP9', better known as Horizon Europe - will run from 2021 to 2027. With the rise of China as an increasingly direct competitor with the EU and the US, this will be a vital period.   Bruegel senior fellow Reinhilde Veugelers, together with Michael Baltensperger, has produced an analysis for the European Parliament's Committee on Industry, Research and Energy. The research paper, on which Reinhilde elaborates in this episode of the Deep Focus podcast, looks at what needs to be prioritised in the next framework programme in order to maintain and improve Europe's position as a leader in this increasingly competitive field.   For further reading we recommend the paper in question, 'Europe – the global centre for excellent research', as well as Reinhilde Veugeler's previous Bruegel Policy Contribution, 'Are European firms falling behind in the global corporate research race?'

The keyword in Ukraine right now is ‘uncertainty’, as the country prepares to elect a new parliament in July only a few months after electing a new president.  Not only will the new government have a role in stabilising and growing the economy following the 2014-15 economic crisis, but they will face the challenge of a large debt repayment during their term while dealing with an aggressive Russia.   In a political climate that is known for being corrupt and not respecting the rule of law, there are opportunities to change the country beyond economic policy.     In this episode of the Backstage podcast series, Giuseppe Porcaro, head of communications and events at Bruegel, hosts non-resident fellow Marek Dabrowski and Hlib Vyshlinsky, executive director at the Centre for Economic Strategy (CES) to discuss the opportunities for the new government and the best recipe of reforms.    For further reading, we recommend this blog post written by Marek Dabrowski about Ukraine’s struggle for reform, as well as this policy contribution on Ukraine’s unfinished reform agenda. 

An analysis of the results of the most recent European elections reveals what Bruegel director Guntram Wolff classifies as a generally positive trend in electoral participation across the EU, with an overall increase of 7% in voter turnout since the last elections in 2014. Additionally, populist parties in the European Parliament seem to have been prevented from gaining ground. However, election results in some EU member states were not as pro-EU at the national level. In this podcast, Guntram Wolff welcomes Ferdinando Giugliano from Bloomberg and Krzysztof Blusz from WiseEuropa to discuss the results in each guest's home countries - Italy and Poland, respectively - and how the nationalist trends in each state might play a role in politics in the new European Parliament and European Commission. If you are interested in Bruegel's work concerning the European elections, we recommend our blog post: ‘Spitzenkandidaten visions for the future of Europe’s economy’, which features the candidates for the next president of the European Commission. You can also visit the main page for our Spitzenkandidaten series, to review the content in full.

Giuseppe Porcaro hosts Bruegel director Guntram Wolff and visiting fellow Rebecca Christie to reflect on the key policy positions taken by the candidates for the European Commission presidency, ahead of May's elections. European elections are fast approaching. With them comes not just a visit to the polls, but the beginning of a sequence involving the European Parliament and the Council that will eventually decide who becomes the next president of the Commission. The Spitzenkandidaten process sees each of the parties put forward their nominated candidate - or candidates - one of whom should eventually assume the presidency, if the various criteria can be met. Looking back upon Bruegel's recent six-part series of events, held in partnership with the Financial Times, the discussants assess the candidates' views on Europe's future industrial policy path, the EU's stance on the growing trade dispute between the US and China, as well as the most vital and realistic euro-area reforms for the next five years. The debate also considers how each of the candidates might be positioning themselves and their parties in the complex process of selecting a new president. Giuseppe Porcaro leads the review with Bruegel visiting fellow Rebecca Christie and director Guntram Wolff, in this special edition of the Backstage series. If you would like to review the series in more depth, we recommend our blog post: ‘Spitzenkandidaten visions for the future of Europe’s economy’, which contains extracts and video clips from the events. You can also visit the main page for our Spitzenkandidaten series, to review the content in full.

Bruegel director Guntram Wolff and Bruegel fellow Uri Dadush welcome William Alan Reinsch, senior adviser and Scholl chair in international business at the Center for Strategic and International Studies, for a discussion of how China-US relations are developing in the context of unfolding trade war. With President Trump increasing tariffs on the US' imports from China and China retaliating in kind, the trade dispute between the two countries is escalating quickly. Here the discussants elaborate on the disruption caused by trade tariffs, the likelihood of China acquiescing to US demands with regard to economic reform, and where the EU might figure in the stand-off.  Guntram Wolff introduces this Director's Cut of 'The Sound of Economics', welcoming Bruegel fellow Uri Dadush as well as William Alan Reinsch, senior adviser and Scholl chair in international business at the Center for Strategic and International Studies.   If you are interested in more of Bruegel's work on this topic, we suggest Uri Dadush's blog post on the full implications of the escalating trade dispute between the US and China. We also recommend Alicia García-Herrero's working paper on the EU's options amid the China-US trade turmoil.

'The Sound of Economics' podcast continues with an instalment of the Deep Focus series, with Bruegel fellow Marek Dabrowski talking to Sean Gibson about the findings of his research paper on Russia's growth problems (co-written with Antoine Mathieu Collin). The Russian economy has weathered several crises in recent decades, most recently between 2014-16. Though this latest dip was relatively not so deep, growth has returned much more slowly this time around than in previous years. Some problems are age-old, while others are a product of recent political movements and developments. In this episode the conversation specifies some of Russia's institutional shortcomings and structural economic weaknesses, accounting for the country's efforts at macroeconomic management and the evolving demographic difficulties particularly concerning Russia's working-age population.  The discussion also reflects on the particular economic impacts of Russia's involvement in Ukraine, and looks ahead to the most vital and realistic possible remedial measures that could yet be taken. If you are interested in more of Bruegel's work on this topic, we recommend Marek Dabrowski's blog post on how Russia's foreign policy obstructs its attempts at economic modernisation. Also consider the same author's recent publication, 'Can emerging markets be a source of global troubles again?'

Bruegel fellows Rebecca Christie and Nicolas Véron discuss how the map of the EU's financial services industry has begun to change, and how it might eventually settle. The Brexit process has begun to unravel the supremacy of London as the financial centre of Europe, yet it remains unclear how the map of the EU's financial system will eventually be refigured. Several cities have emerged to compete not only for the business that is leaving the UK's capital but for new investment as well. This raises broader questions about whether it is more beneficial to have a single hub or to spread financial services across numerous locations. It also poses difficulties for firms that relocate, some of whose general staff may prefer a different destination to that desired by the lawyers and compliance officers. Brexit has set in motion events that will not be undone even if the UK were to throw the process in full reverse, and remain in the EU, and the idea has been mooted that Brexit merely accelerated a desertion of London that may have happened in any case. Still, the future landscape of the EU's financial services industry will still largely depend on the final shape of the UK's future relationship with the EU. Broadly, observers would expect a harder Brexit to yield a swifter and more seismic movement away from London. In this episode of the Bruegel Backstage podcast series, Bruegel visiting fellow Rebecca Christie and senior fellow Nicolas Véron discuss the early developments in this direction, and the likeliest areas of future progression. Each of the discussants made presentations at the Bruegel event 'The emerging new geography of financial centers in Europe', which was conducted under the Chatham House rule. For further reading, we recommend this article written by Nicolas Véron about the relocation of banking business from London to elsewhere in Europe in the wake of the Brexit referendum vote.