Europe will be high on the agenda of the World Economic Forum on Wednesday (24 January), as French President Emmanuel Macron and German Chancellor Angela Merkel take the stage in Davos. But there is “a lot of scepticism” about what the two leaders can do to push forward EU integration, PwC’s chief Bob Moritz told EURACTIV in an exclusive interview.
Bob Moritz is the global chairman of PwC. He spoke with EURACTIV’s Jorge Valero in the World Economic Forum (Davos).
In your global survey of CEOs published last Monday, you expressed your surprise when you spoke about the CEOs’ optimism on the global outlook. Were you surprised because of the negligence of the existing risks?
CEOs are aware of the many risks and uncertainties that are out there. I do think that the CEOs created a degree of resiliency to manage those risks or to think about scenarios for them to be faster in execution and to move forward.
Take Spain as an example. The issue of Catalonia is a good example where that was never predicted to go where it went. It created a lot of disruption. What happened? A lot of companies moved headquarters and were quick to react and manage their way through that, which gave them a degree of confidence that they continued to be able to capture the upside. The degree of confidence because of the resiliency and the agility, the ability to move fast, equips them to be well positioned for the future no matter what may be coming.
Your survey says Spanish CEOs are among the most optimistic, despite the impact of the Catalan crisis on the confidence and the growth forecast. How would you explain it?
Organisations in Spain have done a lot to transform themselves to get ready for digital and things of that nature. Obviously, a lot more needs to be done.
Second, as we know Spain is connected to the Latino community worldwide that represents a big opportunity, not only in Spain but as you think of the Americas. So the confidence in America, in Mexico and Latin America, is an opportunity for them to continue to see the upside that is coming irrespective of what may be happening in Spain.
Thirdly, you see enough leadership that, even though the Catalonia situation is concerning in the eyes of politicians and voters, it did not have as big an impact on consumption or employment. So those things gave a real confidence irrespective of the political agenda that is going on right now.
When you look at the next twelve months, the issues of continental Europe and EU are something to watch carefully. The noises, as well as the mandates that come out of Brussels, will be an interesting thing to watch. I know that your government and your king (Felipe VI) are watching that very carefully right now given the political situation in the country.
As regards eurozone reform, will Chancellor Angela Merkel and French President Emmanuel Macron succeed in deepening the euro area and pushing forward EU integration, as expected by some? Or will the EU institutions kick the can down the road once again?
I think there will be a bit of both. It is clear that Angela Merkel has been a strength that the EU has to rely on. As regards Macron coming in totally new, there is a high expectation that he will bring some changes. So CEOs are very interested in what that means.
The reality is that Germany and France need each other, which has implications in terms of what comes out of Brussels. There is going to be a need for them to work together. The question is whether they can really execute on that, get it done.
I think there is a lot of scepticism in terms of that going forward.
As it happened last year, almost half of CEOs believe that globalisation is benefiting only a few. You said that corporate leaders are ready to act. Why haven’t they acted so far, despite the growing inequality?
Inequality remains, and it is going to remain for a while. But at least the CEOs are starting to act when you look at the amount of money they put into investment. For example, in the US with some of the money brought with the tax reform is being put back to employees, or when you look at their investment they are making in societal issues.
There is much more awareness, with social media showing what is happening. People are aware of the positive aspects so they wonder why they are not part of that.
There has been some progress, but we will have to accelerate it, to put it on steroids. Some countries are starting to do that very well. China is a good example of that. China is trying to be more inclusive for the Chinese population. The question is whether they do it for everybody else.
What would be your recipe to generate more inclusiveness? A pay raise?
Raising salaries would depend much more on the local economy. I think that backing up people for more inclusive opportunities is a way to go.
Education is going to be really important. I don’t think education systems work fast enough to give people the skills they need for the future for both job security and future employment.
The IMF has said that the risk of a new crisis is real, and it may come sooner than we expect. Are we really on the brink of a crisis?
There are big risks, but I cannot predict if they are one, two or ten years from now. But definitely there are a bunch of risks, and they have proven so often that they come up.
We have been in a fairly denying environment. And I think there is much difference between the risks and the stock market. I think there is a disconnect between the stock markets and the underlying risks.
What are these risks?
Debt is definitely one of them. Geopolitical issues are another. The global situation is fragile. All you need is one of the two to pop. Potentially there are one or two down the stream that may come. That is why I was surprised with the results of the CEOs survey.
Have you invested in bitcoin? Would you recommend it?
Personally, I have not invested in bitcoin. I don’t know enough about it, nor do I think I could do given the conflicts of interests and things like that.
I do think bitcoin is something that people may pay attention to. But you don’t want to bank a lot of money on it right now but learn. My issue is that many have not done enough diligence to really understand what it is.