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Europe may be able to attract “talent” that is desperate from across the Atlantic after the election of Donald Trump, the president of the European Central Bank suggested, as he called on the continent to realize its economic potential.
Christine Lagarde says Europe needs to do better to keep its talent and reserves at home, adding that the new US administration’s decision to freeze some funding for President Joe Biden’s Budget Cuts Act could remove one of the incentives to invest in the US.
Without directly addressing Trump, the French central banker indicated that some US citizens may be attracted to Europe after the US inauguration.
“We need to keep the talent at home. We need to keep the money at home. Maybe it’s time to buy a few talents that would be criticized, for one reason or another, from the other side of the ocean,” he said. like that.
Trump’s re-election has prompted some US citizens and expats to consider leaving the country, and UK lawyers report an influx of interest from Americans who are free to move.
Lagarde’s comments came on the final day of the World Economic Forum in Davos, when investors and executives highlighted the contrast between upbeat sentiments about the US economy and deep pessimism about the outlook. Europe’s weakest growth.
Speaking to Lagarde on stage, Larry Fink, BlackRock’s chief executive, said he believed there was too much optimism in Europe and it might be time to reinvest in the continent.
Lagarde said the EU faces “existential threats” but this should serve as a wake-up call for its leaders to act to strengthen the bloc.
He said the positive scorecard for the Eurozone included a low government deficit of around 3 percent of GDP, and his “strong confidence” that annual inflation would. 2.4 percent in December, it was more likely to slow down than accelerate again.
Lagarde acknowledged that some executives were “not very happy” about Europe’s prospects, but said the continent could respond to its economic challenges if its leaders “get their act together”.
Among the changes that could benefit Europe is Trump’s decision to freeze the distribution of some funds under the Depreciation Act, which has served as an important lure for European companies that want to set up production projects in the country of America.
Andy Marsh, chief executive of Plug Power – a US clean hydrogen and components manufacturer that received a $1.66bn loan from the Department of Energy Loan Services in the final hours of the Biden administration – warned that A long hiatus of pure technology funds will be available. force companies to direct investment elsewhere.
“We will go where there are markets,” said Marsh. “If there is more interest for our products because of the strategy in Europe and Australia, we will spend more time in Europe and Australia. I think this is an approach that many companies can take.”
Despite the expected decline in investment in green technology, economists believe that the US remains a more attractive destination for investment capital than Europe.
“You have a limited growth story in the US, you have subsidized or cheap energy for heavy industry, and you have direct pressures in Europe – and a few other places – from Trump says to sell in America, companies will have to produce here,” said Adam Posen, director of the Peterson Institute for International Economics think-tank.
“No matter what, you’re going to have a big increase in foreign (US) investment in the next year or two.”
European politicians in Davos are also arguing that Trump’s vows to create trade barriers open up an opportunity for the EU to strengthen its relations with other countries around the world. Lagarde said Europeans learned after the second world war that “you can’t go it alone” and instead had to sit at the table and cooperate.
She said: “What is happening outside is a challenge but also a great opportunity to reassess and decide whether Europe wants to be an important player or not,” Lagarde said. “I’d argue that it’s got talent, and it’s got style and it’s got ambition.”
Fink, despite his hope that the financial case for Europe has grown, said that Europe was a “myth” because the single market was incomplete, including financial services.
Lagarde refused. “Europe is not a myth. It is not a basket case. It’s an amazing story of change. ”
