‘Gloomy Perceptions of the European Economy are Much Exaggerated’
On November 29th Howard Davies, Director of the London School of Economics and Political Science (LSE), gave a public lecture at the HSE cultural center on ‘Europe — the lost continent?’. The meeting was organized by the HSE International College of Economics and Finance.
Howard Davies is a well known name among economists and financiers. Before being appointed Director of the LSE, he was Chairman of the Financial Services Authority of the Great Britain, and prior to that he was Deputy Governor of the Bank of England. In addition to that, for a number of years Howard Davies was Director General of the Confederation of British Industry and during this time wrote several books on global financial regulation, the banking system and the world financial crisis. His speeches and lectures always attract interest from experts as well as students and the general public.
‘Since 1966 I have been regularly coming to Russia’, Howard Davies said, ‘and yesterday, walking on Red Square, I was thinking that your country has not much changed since that time. But I always have this impression while I’m on the main square in Russia, and it seems to me that this impression has nothing to do with reality’.
This time Howard Davies’s lecture was dedicated to the analysis of crisis and post-crisis events in EU countries. In his speech he tried to answer three key questions: How far is the economic gloom justified?; Has Europe faded into economic and political insignificance?; and If so, should Russia care?
‘While the world economy is gradually recovering from the global financial crisis,’ the lecturer said, ‘the balance of power in the world is changing considerably. Experts stress the rapid economic growth in China and India in comparison with all the other countries. While for many years the U.S. economy has been the locomotive of the world economic processes, today the USA is no longer able to play this dominant role, since the ‘center of gravity’ has obviously moved East. Accordingly, the world economy model as a whole is changing’.
Giving an analysis of the economic situation in the Eurozone, Howard Davies drew the audience’s attention to the disappointing ‘forecast’ for Southern European countries (Spain, Portugal, Italy, Greece), as well as to serious problems in the economies of Iceland, Ireland and Baltic states. At the same time, Germany is demonstrating stable growth thanks to its exports and considerable investments in Asian markets. According to the speaker, The EU’s economy as a whole is characterized by ‘weak growth’, despite the fact that the Eurozone is experiencing serious pressure from troubled, poorly developed economies of some European countries. So, the lecturer emphasized, the gloomy perceptions of the European economy as a ‘black hole’ are much exaggerated. Anyway, Europe is more effectively facing the contemporary economic challenges than the USA. The economic model of the EU has proved to be stronger that many had thought’.
Summarizing his speech, Mr. Davies shared his opinion on the necessary reforms needed to bring the Eurozone countries out of the crisis or at least prevent the development of more serious problems within the EU. Speaking about the difficulties of introducing new mechanisms of EU economy administration, Howard Davies quoted an English proverb ‘If something is inevitable, it's wise to welcome it’.
Answering a question about how important the balance of powers in the world economy is for Russia, the speaker said: ‘Since the European Union is the largest trade partner of the Russian Federation, your country cannot be indifferent to the problems of European countries. After all, Russia exports not only oil and gas to Europe, but also football players’.
The audience of the lecture was mostly students and teachers of the HSE International College of Economics and Finance, with which Howard Davies and the LSE has had many years of successful cooperation. Despite the gravity of the topic, Howard Davies maintained the audience’s attention and injected some humour into the topic.
Valentina Gruzintseva, HSE News Service
Photos by Nikita Benzoruk