Small, not weak
In his State of the Nation Address delivered in Parliament, Prime Minister Jean-Claude Juncker said that saving and consolidating would be necessary, as well as growth and investments. But he warned at the same time that this would not be enough when it comes to regulating financial markets. Mr Juncker holds the opinion that the finance industry must participate in the handling of the consequences of this crisis.
Jean-Claude Juncker is, in principle, in favour of a financial transaction tax. But in the meantime he has doubts about its efficiency in order to achieve better regulation. He is also pretty realistic about its scope, stating that he doesn’t believe it will be put into practice by all 27 Member states of the European Union respectively at a G-20 level. But the Prime minister firmly believes that the finance sector has to pay its dues.
“It is the finance industry with its lack of judgement and its unrestrained greed have plunged us into this crisis. That’s why we need to find other ways of holding the financial sector, which is responsible for this crisis, accountable.“ At the same time, he underlined that the regulation of financial markets has to continue without strangling financial activities. Mr Juncker also said that Luxembourg aims to rely less on the financial centre in the future: diversification of the economy is key. Activities in the logistics, IT and biotech sectors will be boosted.
A large part of his speech was dedicated to the future of the European Union and its shrinking influence in the world. He reminded the audience of the fact that at the beginning of the 20th century, 20% of the world population was European. In the year 2050, they will only represent 7% of the world population. This figure will fall further with a projected 4% Europeans accounting of the total world population by the end of the 21st century.
This trend has, of course, to be put into the context of economic power. Jean-Claude Juncker remarked that while in 2010 Europe and the USA accounted for 41 % of global GDP, in 2050 both continents will only represent 18%. The Asian continent will at the same time have doubled its economic strength. That is why he made an appeal that the European Union has to be strengthened and that Luxembourg has to be a leader in this integration movement.
Mister Euro and his Eurobonds
Mr Juncker broke a lance for a Europe that needs to consolidate its national budgets but also needs consistent economic growth. “You must be blind not to see that saving money without improving the living conditions of the population is tiring and doesn’t help the economy to pick up”. To boost investments in Europe, he pleaded for a capital increase of the European Investment Bank and the launch of Eurobonds.
Mr Juncker also addressed Luxembourg residents. He asked them to get rid of their provincial way of thinking. “Luxembourg has always relied on foreign capital to get its economy going. For a long time, that capital has been German, French or Belgian and later, American. Now this money is Asian, Russian or from the Gulf States. We don’t mind doing trade with these new players and we don’t mind earning a lot of money with exports. But it seems as if we often have doubts when companies and capital from these regions come to us”.
In his conclusion, he said that we want a country that is pro-European, diversifies its economy, sees budget consolidation as a necessity but not as a State objective and is not afraid of reforms. The Luxembourg Prime Minister in the end hopes that his country will remain the country where a great deal of emphasis is placed on solidarity and social dialogue. CW
Crédit photo : © SIP / Nicolas Bouvy