A summary of a speech from EU Lagarde at College des Bernardins:

Current Challenges

  1. Technological Lag:

    • Europe is falling behind in innovation and productivity compared to the U.S. and China.
    • EU specializes in outdated technologies; only 4 of the world’s top 50 tech firms are European.
    • Lack of unified digital market and venture capital investment hinders technological progress.

  2. Geopolitical Shifts:

    • Global trade fragmentation and competition with China threaten Europe’s open economy.
    • EU's declining world trade share and increased reliance on foreign venture capitalists for tech funding.

  3. Economic Pressures:

    • Slowing productivity growth reduces tax revenue potential, threatening funding for pensions, climate, and defense needs.
    • Estimated €1 trillion annually required for climate, innovation, and security investments.

Proposed Solutions

Adaptation
  • Economic Integration: Unlock single-market potential; address internal trade barriers (e.g., equivalent to 44% tariffs on manufacturing).
  • Capital Investment: Redirect €8 trillion in EU savings toward innovation and technology development.
  • Skills Development: Focus on digital and advanced skills to empower individuals and enhance inclusion in the digital economy.
Anticipation
  • Technology Impact: Prepare for AI-driven automation by prioritizing reskilling and adult learning.
  • Geopolitical Unity: Treat the EU as a single, unified economy with shared interests in climate, defense, and social welfare.
  • Public-Private Partnerships: Collaboration to fill education and training gaps, enabling workers to adapt to rapid technological changes.

Call to Action

  • Regain lost ground in productivity and competitiveness.
  • Pool resources for collective challenges (e.g., green transition, security).
  • Balance social welfare and technological progress to sustain Europe's unique economic model.

Conclusion

  • Europe must adapt to modern challenges with a renewed focus on unity and innovation, quoting Marcus Aurelius: “What stands in the way becomes the way.”

Meanwhile the EURUSD is continuing it's stretch to the upside with the price moving to a new high at 1.05941. That has the price above the swing area target at 1.05926 and looks next toward the 1.0600 to 1.0610 swing area (see post here).