The economy of Europe weathered dreadful prophecies, but it has since developed to deal with trade with China The EU's Gentiloni.
Outgoing European Commissioner for Economy Paolo Gentiloni stated on Saturday that although the European Union has managed to flee the "terrible prophecies" that endangered its economy in recent years, it still needs to deal with Russia's war in Ukraine and a precarious trading connection to China.m
At the Ambrosetti Forum at Cernobbio, on the shores of Lake Como in Italy, Gentiloni told CNBC's Steve Sedgwick that the bloc's economy had experienced "overall low development, but nothing of the awful predictions that we noticed in the last two or three years: recessions, blackouts, separation, sections in Europe ahead of Russia's invasion."
From December 2019, former Italian prime minister Gentiloni has been the European Commissioner for Economy under the leader Ursula von der Leyen of the European Commission. The European Central Bank is in charge of the region's monetary policy and interest rate choices, while the European Commission is in charge of the 20-nation euro zone's economic plan and laws, including tariffs. After Von der Leyen's turbulent reelection as president, Gentiloni will not serve a second term as commissioner; however, he has outlined the economic landscape that will face his soon-to-be successor.
"The economy is expanding, albeit slowly. Additionally, there are extremely few chances of the European Union's disparities now, compared to how high they were throughout the pandemic. "The unfortunate aspect of the situation is that Europeans will find the new global environment to be extremely challenging if we don't improve our competitiveness, make significant strides toward the capital markets union, and address the defense challenge."
Europe has been struggling with a high rate of cost increases and inflation of living issue since the Covid-19 epidemic, which has been made worse by Russia's invasion of Ukraine in February 2022 and limited energy supplies as a result of sanctions against Moscow. The initial half of this year has seen improvement in the euro zone's economy, as evidenced by flash statistics that show better-than-expected growth in gross domestic product of 0.3% in the three months leading up to the last day of June when contrasted with the same period last year.
The European Commission predicted in its spring projections that the GDP of the EU will expand by 1% in 2024 and by 0.8% in the euro area, including growth of 1.6% and 1.4% in the two regions, respectively. The Commission noted growth at the time due to increased private consumption, falling inflation, and a robust job market, but it also pointed to broader geopolitical dangers in light of the ongoing conflicts in the region of the Middle East and Ukraine.
In June, the European Central Bank (ECB) reduced its reference rate from a record 4%, where it had stood since September 2023, to 3.75% in response to a decline in inflation. This was the first monetary policy easing move since 2019. Markets have already factored in a second rate reduction from the ECB at its upcoming meeting on September 12 as of Friday.
The ties with China
Looking ahead, Europe now has to deal with the dual storm of closely contested elections in November in the United States, a major trading partner, and tensions in its trade relations with China. Beijing has turned its attention to the EU after the bloc decided in June to slap higher tariffs on Chinese imports of electric vehicles, citing the fact that the vehicles "strongly profit from unfair subsidies" and represent a "threat of economic injury" to European EV manufacturers.
On Saturday, Gentiloni emphasized that the conflict in Ukraine and trade negotiations with China should be at the top of the Commission's list of priorities. He further stated that these issues are more urgent than the possibility of a second U.S. administration led by former President Donald Trump. In addition to "abandoning our creativity in the trade relation with China," the European Union must "support Ukraine, keep the doors of global commerce open." However, Gentiloni pointed out, "This does not imply that we can embrace the notion that international commerce and international trade regulations [are] over.
"I think that an shift in the U.S. administration, meaning Trump won the presidential election, of course it will not be appreciated in Brussels, but I don't think that the transformation would be enormous in terms of economic relations," he said, downplaying the financial consequences of a Trump triumph in November.
Change-related winds
As far-right support for Europe and its legislative body grows, Gentiloni has not yet stated what he plans to do after leaving the Commission.
"Never plan your next part when you are already playing one. However, I will undoubtedly contribute to European issues and perhaps even Italian politics and affairs," he declared on Saturday. It was improbable that the left-wing politician would win over Italian Prime Minister Giorgia Meloni, who has nominated Raffaele Fitto, a member that she right-wing Brothers of Italy coalition, as Minister for European Affairs for participation in the next EU executive.
In the most recent European elections, far-right groups made significant gains. As a result, Viktor Orbán, the right-wing prime minister of Hungary, who presides over the EU Council, questioned whether a van der Leyen Commission would be acceptable given the political atmosphere. The main source of the problem is that the previous Commission was largely ineffective in halting the war, improving the competitiveness of the European economy, and managing immigration. Therefore, in overall, it was a failure as a Commission, the Hungarian leader said to CNBC's Sedgwick on Friday, adding that an option was made to essentially "develop the same Committee."
He went on, saying, "I firmly believe that people can transform and perform superior to they have in the past." However, it is challenging to believe such. I therefore make every effort to support the Commission, but as a reasonable guy, I believe that we disregarded the voters' desire for change, and the current Brussels system is still in place, which is bad.
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