Moscovici: ‘Trump will bring more nationalism and protectionism’

Pierre Moscovici at the World Economic Forum. [Jorge Valero]

Commissioner for Economic Affairs Pierre Moscovici agrees with the ‘wait  and see’ approach toward new US President Donald Trump mostly shared by the global elite in the in Davos. But he sees more nationalism and protectionism coming from the White House.

Pierre Moscovici has been Commissioner for Economic and Financial Affairs, Taxation and Customs since 2014.

He spoke with’s Jorge Valero during the World Economic Forum, Davos.

According to the global outlook outlined by the IMF’s Christine Lagarde, and shared by the private sector, the global economy will be resilient enough to absorb potential negative measures coming from the Trump administration. Do you agree with it?

We don’t know what President Trump’s economic policy will be. We know what his programme was, his speech as president-elect. We can imagine that it would be more expansionary than today, with short-term positive effects, but also medium-term difficulties link to the inflation. It would be more favourable to businesses than the bottom 10% of the population. We also know that it would be more nationalistic if not protectionist than today. But we don’t know precisely how these elements will combine together, how strong they will be, how the administration will act, or how Congress will react. Whatever happens, I am also convinced that the global economy is in better shape, and it is resilient enough to be capable of dealing with any political choice in the US.

Are we prepared also in Europe?

Yes. I am also confident because I met a lot of people in Davos, from the public and the private sector, and they told me that the recovery in Europe is gaining strength. I cannot anticipate what our Winter forecast will say in a few weeks from now. But I sense a greater feeling of confidence today than in the past.

Commission cuts growth forecast for both EU and eurozone in 2017

Europe’s economy will grow less than initially expected as domestic and global risks have intensified, mainly in the wake of the UK referendum and the increased opposition to globalisation.

In Autumn, the Commission cut the growth forecast for 2017. Would you revise it upwards because of this confidence or is the political turmoil still significant?

We will present our forecast in February. But my feeling is that the recovery in the EU is now gaining strength. We are preparing the figures now. But the contacts I had in Davos were more optimistic than one year ago, even a few months ago.

Investor George Soros said that the US is preparing for a trade war. Do you share his assessment?

I will not use that vocabulary. The interests of the US and its partners is to remain in a cooperative mood. there were speeches delivered during the campaign. But some members of the future administration, including his upcoming trade secretary, are pro-trade. Lets wait and see. We must be vigilant but not in an offensive or suspicious attitude. There is so much interest in trade both for the EU and its partners that we will avoid that risk. But there will be more protectionism than today. There can be also  a redefinition of the trade policy, involving the so-call losers of globalisation.

May flogs ‘Global Britain’ to world leaders in Davos

In the wake of confirming that “Brexit means hard Brexit”, UK Prime Minister Theresa May opened her arms to the world at the World Economic Forum, saying Britain is a great, global trading nation and is ready to shape globalisation.

Do you expect a greater negative impact as a result of Trump’s decision-making or the ‘hard Brexit’ that Prime Minister Theresa May outlined on Tuesday?

On Brexit, I want to be very pragmatic and progress step by step. I don’t want to speculate on the outcome of a negotiation that has not even started yet. Now we know that the UK has decided not to be a member of the internal market. We have to define a new model. We will see what it will be.

But her proposal will have a negative impact on the eurozone economy…

It is impossible to say. Again, I am quite confident about eurozone growth.

Despite all the political instability within Europe and around Europe…

We need to consider ourselves as a privileged area in the world. I am always struck by the criticism we address to ourselves, while the rest of the world knows we are a very strong economic power, with a high level of social cohesion. We must be proud of what we are doing, instead of always being self-defeatists.

Rutte and Schulz take the gloves off in front of Davos elite

Dutch Prime Minister Mark Rutte and former European Parliament President Martin Schulz clashed over the strategy to relaunch the Union, illustrating the deep division at Europe’s helm in front of the global audience of the World Economic Forum.

Yesterday (19 February) there was an intense discussion about the future of Europe between Dutch Prime Minister Rutte and former president of the European Parliament Martin Schulz. Rutte said that the ‘ever closer union’ principle is buried. Were you surprised to hear that statement in the 60th anniversary of the Treaty of Rome?

Some people are in campaign mode. I personally believe that the ‘ever closer union’ principle is still our perspective. In this more complex world, with a new kind of presidency in the US, with the challenges emerging from Brexit, the threat of Russia, the power of China, uncertainties in Turkey, and other challenges, we need more than ever a united Europe and a strong eurozone. That is why the Commission will not be in a pause mode, but we will move forward. We are going to deliver ambitious proposals in the white paper we are preparing for the 60th anniversary of the Treaty of Rome. We need a Europe which is more protective, more democratic, and more efficient. We all agree on that. But we don’t need less Europe. It is not the end of the European project. On the contrary, it is the moment to act.

Precisely because of these elections in various member states we should not expect massive changes in 2017…

We are aware that this is an electoral year. But we must prepare the  momentum. The role of the Commission is to be the driving force for proposals. So you can expect from us ambitious proposals.

Eurozone agrees short-term debt relief for Greece amid IMF row

Eurozone finance ministers on Monday approved new debt relief measures to alleviate Greece’s colossal debt mountain in the wake of its huge €86 billion bailout, but at levels far short of those demanded by the IMF.

Following your disagreement with the IMF over the Greek programme, did you have the opportunity to talk to Lagarde in Davos? 

I had a very positive exchange of views with Lagarde yesterday (19 February). We consider the IMF an institution with a decisive role in the programme. The priority now is to conclude the second review as soon as possible. There are still few issues on the table. With some efforts from both sides we can move swiftly to a conclusion. That was also the message of the meeting I had with Greek finance minister Tsakalotos. I am also confident that we can get back to our agreement in December and unlock soon the short-term debt measures, since commitments were taken to follow the fiscal path in 2017 and 2018 by the Greek authorities. Lets be very pragmatic. My priority is not to discuss institutionally the framework, but to conclude the review.

World Economic Forum: Full coverage from Davos

Between 17 and 20 January, the Swiss mountain village of Davos hosted the World Economic Forum. After a hugely tumultuous year, was on-site to provide all the latest developments.

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