The Sound of Economics

Bruegel senior fellow J. Scott Marcus joins Sean Gibson for this episode of Deep Focus on the 'The Sound of Economics', elaborating on a Bruegel study for the European Parliament into the progress made with the Commission's Digital Single Market Strategy since 2015. In a study for the European Parliament, Bruegel senior fellow J. Scott Marcus (together with co-authors Georgios Petropoulos and Timothy Yeung) has reviewed the gains delivered so far by these new measures, insofar as they can yet be determined. The authors also look at what the next legislative term might deliver, what realistic progress can be expected and what business remains unfinished regarding measures implemented by the current Commission. Speaking to Bruegel press officer Sean Gibson in this episode of the Deep Focus podcast series, Scott Marcus specifies some of the real achievements that the DSM can - and, indeed, has begun to - deliver for both consumers and producers. More broadly, the DSM is put in the context of efforts to digitise European society, specifically how well policies towards the former are keeping pace with the latter.  We invite you to review the research paper in question in this episode, but also recommend consulting Scott Marcus' testimony before the European Parliament Committee on the Internal Market and Consumer Protection (IMCO).

Bruegel fellows Alicia García-Herrero and Uri Dadush join Guntram Wolff for this Director's Cut of 'The Sound of Economics', focusing on the progress made by China's Belt and Road Initiative, how it will continue to develop, and the reactions it has stirred across the world. China’s Belt and Road Initiative (BRI) is a trade and development strategy proposed by Xi Jinping in 2013. It aims to enhance development prospects via infrastructure, trade, and investment on a trans-continental scale, and is hence often referred to as 'the 21st century's Silk Road'. Five years after its launch, how well has the BRI been received and how much potential does it still hold? Two Bruegel scholars, Alicia García-Herrero and Uri Dadush sit down with Bruegel's director Guntram Wolff to discuss their analyses of the initiative. In a recent Policy Contribution, Uri Dadush and Michael Baltensperger reflect on the background and context of the BRI, and critically assess the project's potential for future performance. In this podcast episode, Uri points to the worrisome aspects of the initiative, particularly the lack of transparency and due diligence concerning the issue of debt trap, as well as China's poor regard for the possible environmental impact. In a newly released Working Paper, Alicia García-Herrero and Jianwei Xu analyse large amounts of data to identify the trends in the global perception of the BRI. In this episode Alicia lets us in on their findings. For example, she explains why – despite the generally positive image of the initiative – it is the Central European countries, which benefited from substantial assistance from China, that have a relatively negative perception of the initiative. For further reading, you may consider Simone Tagliapietra and Shivali Pandya's blog post on Chinese investment in European maritime ports, as well as a piece by Alicia García-Herrero and Jianwei Xu discussing what the Belt and Road Initiative means for EU trade.

This episode of The Sound of Economics features Bruegel senior fellow Zsolt Darvas in conversation with Maurizio Bussolo and Bernadette Ségol about income inequality in Europe and Central Asia, and the policy principles underpinning a possible new social contract.  Although income distribution in Europe and Central Asia reaches a fairly egalitarian standard relative to the rest of the world, the current levels of inequality among individuals and households are a major cause of dissatisfaction. In the time of globalisation and rapid technological change, when income inequalities heavily affect people's security and well-being, the demand for a new social contract (and hence welfare state) is apparent. But what would a renewed social contract look like? In this episode of Bruegel Backstage, senior fellow Zsolt Darvas talks to Maurizio Bussolo, the lead economist for Europe and Central Asia at the World Bank, and Bernadette Ségol, the former secretary general of the European Trade Union Confederation. The document that brings them together is the recently published World Bank report, “Towards a New Social Contract: Taking on Distributional Tensions in Europe and Central Asia”, co-written by Maurizio Bussolo. It highlights the shortcomings of the current systems both for taxes and transfers and for labour-market regulation. The report sketches out the policy principles to guide a potential new social contract, principles that assume universal social assistance and insurance, labour protection, and more progressive taxation. If implemented, the report suggests, these measures would improve mobility and flexibility, helping to overcome the inequality traps and provide a broader, more just access to opportunities. For further reading, you may consider Zsolt Darvas' blog post on the EU income inequality decline, as well as a publication on the hardships of achieving the EU's poverty target by the same author. This podcast was recorded following a Bruegel event, "Towards a new social contract" on January 24th 2019.

Bruegel director Guntram Wolff is joined by senior fellow Zsolt Darvas to rake through the possibilities and probabilities inherent in a no-deal Brexit scenario, covering trade, the Irish border, citizens' rights and the EU budget. Bruegel senior fellow Zsolt Darvas joins Guntram Wolff for this Director's Cut, to discuss the economic fall-out of a no-deal Brexit. While the UK remains without an agreement on the nature of its relationship with the EU beyond March 29th 2019, the possibility of a no-deal Brexit - and its bundle of complex permutations for each sector - is still on the table. What would a WTO-based trade relationship between the EU and the UK look like in reality? Beneath surface-level tariffs, the value chains that would be broken by a hard border in the English Channel could have far-reaching consequences. And in Ireland, the more innovative border solutions remain mostly unsubstantiated, and at the very least would require a long implementation period - the time for which has long since passed. A no-deal Brexit also has implications for the EU budget. Our calculations specify the gap to be filled if the UK were to stop contributing immediately, as well as the spread of the additional burden across the EU's member countries. For further reading on this subject, consider Guntram Wolff's Policy Contribution on how well prepared the EU might be for a no-deal Brexit scenario, as well as Zsolt Darvas' full breakdown of the implications for the EU budget of the UK 'crashing out' of the union.

Bruegel fellows Reinhilde Veugelers and Simone Tagliapietra elaborate on the recent Policy Contribution they co-authored on the European automotive industry in the light of the global electric vehicle revolution. Electrification is a key trend transforming the global automotive industry, especially in the light of increased decarbonisation efforts. The speed at which the technology is being developed and the decreasing production costs make for a rather optimistic prognosis for future global deployment of electric vehicles (EVs). The automotive sector is undoubtedly an important one for the EU economy, yet it has lagged behind in terms of both EV manufacturing and deployment. In this episode of Deep Focus, Sean Gibson interviews Reinhilde Veugelers and Simone Tagliapietra, the co-authors of a recently published Policy Contribution on the EU automotive industry and the global EV revolution. European manufacturers have extensive experience, robust R&D projects and a large internal market, but can they make the switch to EVs sufficiently fast to remain competitive? To answer that question, Reinhilde and Simone outline the current picture of China's industry and point to the lessons that can be learnt from their electrification success story. While Europe cannot and should not adopt the centrally planned policy measures, a more comprehensive policy framework combining both demand- and supply-side instruments is necessary to bring the industry back up to speed. The research discussed in this episode is available in full in the Bruegel Policy Contribution, "Is the European automotive industry ready for the global electric vehicle revolution?", by Gustav Fredriksson, Alexander Roth, Simone Tagliapietra and Reinhilde Veugelers. For further reading, we recommend a blog post on low carbon technology exports by Georg Zachmann and Enrico Nano.

With 2018 drawing to a close, and the dawn of 2019 imminent, Bruegel's scholars reflect on the economic policy developments we can expect in the new year – one that brings with it the additional uncertainty of European elections. These elections will be a bellwether for the continent-wide rise of populist politics that has been a defining characteristic of the year past. The results will certainly have profound consequences for all policy debates within the EU, but also for the bloc's relationship with external partners. The shifts in the geopolitical landscape have borne a trade war, prompting renewed talk of closer ties between China and the EU, the potential internationalisation of the euro, and how the multilateral trading system might be saved, reformed, or left behind. Meanwhile, 2019 promises fierce debate of the next EU budget for 2020-2027, not entirely separate from the mooted euro-area budget and the ongoing efforts at euro-area reform and expansion. The upcoming elections will be pivotal in determining the complexion of these discussions as the year progresses. Speakers:  Maria Demertzis Jean Pisani-Ferry Francesco Papadia Elina Ribakova André Sapir Nicolas Véron Thomas Wieser Guntram Wolff

Bruegel senior scholar Zsolt Darvas speaks about his review of systematic errors in ECB forecasting, in another instalment of the Deep Focus podcast on 'The Sound of Economics' channel In this episode of the Deep Focus, Sean Gibson speaks with Bruegel senior scholar Zsolt Darvas about his research on European Central Bank forecasting. Zsolt has analysed that, over the past five years, ECB forecasts have proven to be systematically incorrect: core inflation remained broadly stable at 1% despite the stubbornly predicted increase, while the unemployment rate fell faster than predicted. Such forecast errors, which are also inconsistent with each other, raise serious doubts about the reliability of the ECB’s current forecast of accelerating core inflation, and necessitates a reflection on the inflation aim of the ECB. You may also be interested in this blog post by Zsolt Darvas, which contains charts illustrating just how erroneous the ECB's forecasting on inflation and unemployment has become in recent times.

Bruegel fellow Georg Zachmann talks through a Bruegel Blueprint he has co-authored, looking into the potential distributional effects of climate policies, in another episode of the Deep Focus series. Climate change is one of the big questions of this century, and mitigating its effects remains an enormous challenge. Decarbonisation will require a massive shift in our economies. Heating, transport, electricity and industry will have to transition to a world without fossil fuels. Agriculture and industry will have to find new ways to reduce emissions. This aim – as ambitious as it is essential – necessitates intrusive climate policies. In this episode of Deep Focus, Sean Gibson interviews Georg Zachmann, a co-author of a recently published Blueprint on distributional effects of climate policies. They untangle the complicated picture of said effects, which may vary depending on the policy tool and its design, the sector addressed and the initial socio-economic conditions in the country. Some policy tools such as carbon taxes may leave low-income households worse off, while policies such as taxes on aviation may leave them better off relative to high-income households. Others, like public investment and agriculture policies, still have unclear effects. One thing is for certain: whatever distributional effects climate policies may have, they constitute no argument against their implementation. Climate change would leave everyone worse off and disproportionately hit the poorest part of the population. It is therefore essential to design policies in a way that minimises the adverse effects on those most vulnerable. For further reading, you might consider an opinion piece by Simone Tagliapietra and Georg Zachmann on what the “gilets jaunes” movement tells us about environment and climate policies, as well as their blog post on the EU energy industry transformation.

In this episode of the Backstage series, Bruegel's Non-Resident Fellow Dirk Schoenmaker welcomes Molly Scott Cato, a Green party MEP for South West England, for a conversation on the EU's plan to transition towards sustainable finance. To achieve the EU's 2030 targets agreed in Paris, such as a 40% cut in greenhouse gas emissions, in May 2018, the Commission announced its action plan on sustainable finance. Its aims are, among others, to facilitate sustainable investment and improve the availability of information on investments carbon footprint.   Molly Scott-Cato in conversation with Dirk Schoenmaker outlines the details of the plan and elaborates on the steps necessary for the transition from brown to green finance, from vast investments into public infrastructure to the introduction of carbon tax on aviation.  While it is important to introduce dynamism to the discussion, we have to keep in mind to balance the sense of desperate urgency to avoid a systemic crisis. For further reading, you might consider a policy contribution by the same author Sustainable investing: How to do it. This podcast episode was recorded during the event How to speed up sustainable finance? on the 28 of November

Bruegel's director Guntram Wolff looks at north Africa's economic growth in the light of the region's trade agreements with the EU, welcoming Karim El Aynaoui and Uri Dadush to the Backstage series on 'The Sound of Economics'. In this episode of Backstage, Bruegel's director Guntram Wolff welcomes Uri Dadush, a non-resident scholar at Bruegel and a Senior Fellow at the OCP Policy Center, as well as Karim El Aynaoui, managing director at the OCP Policy Center. Together, they look at north Africa's economic growth in the light of the region's trade agreements with the EU. This podcast episode touches upon a Policy Contribution co-authored by Uri Dadush, which provides an economic assessment of the EU-north Africa trade agreements. While their performance is not spectacular, the agreements' common view often appears too harsh, especially bearing in mind the unfavourable domestic and international environment in which they came into force. Despite the visible misallocation of capital and insufficient job creation, some sectors in the region – such as the automotive, pharmaceutical and aeronautical industries in Morocco – are doing exceptionally well, both in terms of performance and integration. The question remains about the potential direction the region may wish to take when moving forward with its growth plan. To ensure strengthened EU-north Africa value chains, we have to move beyond the blanket-approach and instead reward the best performance. For further reading, you might consider an opinion piece on the China-Africa economic relationship written by Alicia García-Herrero, as well as a blog post by Marek Dabrowski and Yana Myachenkova on the difficult task of achieving free trade in Africa. This podcast episode was recorded during the third edition of the "Platform for Advanced & Emerging Economies Policy Dialogue", which focused on the core theme of “Policy Responses for an EU-MENA shared future”.