The Sound of Economics

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”.

In this episode of the Director's cut, Bruegel's director Guntram Wolff hosts a conversation with Danièle Nouy, the first chair of the European Single Supervisory Mechanism. On the eve of the end of her mandate she traces the legacy of her five years and the prospects for the future of banking supervision in Europe.

In November 2008, the first G20 summit at the leaders' level took place amid the global financial crisis. The admittedly ambitious undertaking has since played its role in stabilising the global economy throughout the aftershocks of the crash. Today, the global order looks much different to the one in which the G20 found itself 10 years ago. How has the institution evolved and is it still equipped to create a supportive political environment for strong national and global actions? In this episode of Bruegel's Deep Focus series on 'The Sound of Economics', Suman Bery reviews the G20's performance over the past decade to identify the challenges for the future. After the initial success, he identifies a sense of complacency that has seemingly crept into the global forum. Moreover, the emerging and developing economy members have remained observably passive, which may reflect their discomfort at their perceived systemic importance despite lower levels of income. A further challenge for the G20 arises from Donald Trump assuming the US presidency in 2016, and the following tendency to drift away from multilateralism in favour of bilateral trade. The upcoming summit in Buenos Aires may be revealing in terms of just how much the G20 depends on American leadership. Another question remains about what potential the EU has as a future leader within the institution. One thing is certain: to champion a comprehensive approach, the G20 must conceive a set of rules that closer reflects the changing world. For further reading we suggest not only the Policy Contribution written by Suman Bery – 'The G20 turns ten: what’s past is prologue' – but also the blog post of Jim O'Neill and Alessio Terzi, outlining a proposal for a reformation of the G7.

This episode of the Director’s Cut features a conversation between Bruegel’s director, Guntram Wolff and Maha Yahya, the director of the Carnegie Middle East Center, where her research focuses on citizenship, pluralism, and social justice in the aftermath of the Arab uprisings. Yahya is the author of numerous publications, including most recently “Unheard Voices: What Syrian Refugees Need to Return Home” (April 2018); “The Summer of Our Discontent: Sects and Citizens in Lebanon and Iraq” (June 2017); and “Refugees and the Making of an Arab Regional Disorder” (November 2015).  For further reading, we recommend our blueprint "People on the move: migration and mobility in the European Union", written by Uuriintuya Batsaikhan, Zsolt Darvas and Inês Goncalves Raposo. Zolt Darvas also contributed to the debate on migration and refugees in Europe with two blogs on similar topics: Beyond border control, migrant integration policies must be revived and The challenge of fostering financial inclusion of refugees.

Think-tanks play a critical role in developing and promoting policy solutions, particularly in times of extreme disruption and change. However, these organisations now operate in information-rich societies where facts, evidence and credible research are often ignored – and where disinformation can gain a footing. In this edition of the Bruegel Backstage podcast series on ‘The Sound of Economics’, Bruegel secretary general Matt Dann welcomes senior thought leaders from research centres around the world, to discuss a range of strategies and best practices for transforming public policy and institutions in an era of digital and political disruptions as well as increased social and economic turbulence. Speakers Matt Dann, secretary general at Bruegel James McGann, director of the Think Tanks and Civil Societies Program at the Lauder Institute, University of Pennsylvania Milena Lazarević, programme director and co-founder of the European Policy Centre in Belgrade, Serbia Edward Kofi Anan Brown, senior director for research and policy engagements at the African Center for Economic Transformation in Ghana Credits Produced by Giuseppe Porcaro James McGann, Milena Lazarević and Edward Kofi Anan Brown participated in the Global Think Tank Summit 2018, hosted by Bruegel in Brussels.