De!ontmoetingen!van!de!BELGIAN!FINANCE!CLUB!! 2015:!Confrontatie!van!de!opinies!van!5!grote!economisten!

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1 DeontmoetingenvandeBELGIANFINANCECLUB 2015:Confrontatievandeopiniesvan5groteeconomisten Maandag15december2014om18u15indekantorenvan TreeTopAssetManagement,79,Frankenstraat,Brussel 18u15:Onthaaldeelnemers 18u30:ConferentieendebatmetdeparticipatievanFrederikDelaplace,directeurvanderedactiesvanMediafin Evolutievanderentevoetenenwisselkoersen: PeterVandenHoute,ChiefEconomistING VooruitzichtenvandeBelgischeeconomie: EdwinDeBoeck,ChiefEconomistKBCGroup Problematiekvandeoverheidsschulden: Prof.Dr.BrunoColmant,partnerRolandBerger Europa:gebrekaanconcurrentievermogen?: GeorgesUgeux,CEOGalileoGlobalAdvisors Structurelehervormingen,tewerkstellingenongelijkheden: PhilippeDefeyt,VoorzitterOCMWvanNamur 20u00:WalkingDinnerennetworking Inschrijvingen:35 (lid)of50 (nietlid)testortenopderekeningvandebfcbe ofviadewebsitewww.belfinclub.be

2 LesrencontresduBELGIANFINANCECLUB 2015:Confrontationdesavisde5grandséconomistes Lundi15décembre2014à18h15danslesbureauxde TreeTopAssetManagement,79,ruedesFrancsàBruxelles 18h15:Accueildesparticipants 18h30:ConférenceetdébataniméparFrederikDelaplace,directeurdesrédactionsdeMediafin(Echo&Tijd) Evolutiondestauxd intérêtetdescoursdechange: PeterVandenHoute,ChiefEconomistING Perspectivesdel économiebelge: EdwinDeBoeck,ChiefEconomistKBCGroup Problématiquedesdettessouveraines: Prof.Dr.BrunoColmant,partnerRolandBerger L Europeenpertedecompétitivité?: GeorgesUgeux,CEOGalileoGlobalAdvisors Réformesstructurelles,emploietinégalités: PhilippeDefeyt,PrésidentduCPASdeNamur 20h00:WalkingDinneretnetworking Inscriptions:35 (membres)ou50 (nonqmembres)àversersurlecomptedubfcbe ouvialesitewww.belfinclub.be

3 Programma/Programme 1) Problema,ek van de overheidsschulden /Probléma,que des de9es souveraines : Prof. Dr. Bruno Colmant, partner Roland Berger 2) Evolu,e van rentevoeten en wisselkoersen / Evolu,on des taux d intérêt et cours de change : Peter Vanden Houte, Chief Economist ING 3) Europa: gebrek aan concurren,evermogen? / L Europe en perte de compé,,vité? Georges Ugeux, CEO & Chairman Galileo Global Advisors 4) Vooruitzichten van de Belgische economie / Perspec,ves de l économie belge : Edwin De Boeck, Chief Economist KBC Group 5) Structurele hervormingen, tewerkstelling en ongelijkheden : Réformes structurelles, emploi et inégalités : Philippe Defeyt, Président du CPAS de Namur QUATRE SLIDES BFC.pptx 3

4 Bruno Colmant The problem of the sovereign debt 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% % 80% 70% 60% 50% 40% 30% 20% % of countries with annual inflation over 20% % of countries in default or restructuring Total public debt/gdp (world average) QUATRE SLIDES BFC.pptx 4

5 The euro? A political decision with insufficient economic ground : monetary federalism BUT budgetary confederalism Windfall effect (monetary expansion, German rating, low rates) Monetary mobility but increased government pressure The euro is genetically recessionary QUATRE SLIDES BFC.pptx 5

6 Welcome to euro austerity : a suicide Unemployment rate : 12,1 % Austerity fuels recession that requires more austerity The same mistake as in the Thirties (Hoover, Brüning, Laval, ) Risk of a global nationalization Self-destructive QUATRE SLIDES BFC.pptx 6

7 QUATRE SLIDES BFC.pptx 7

8 Interest rate and exchange rate perspectives Peter Vanden Houte Chief Economist ING Belgium 8

9 The disappointing recovery GDP since start of the crisis (Q = 100) UK Japan Eurozone 9

10 Secular stagnation arguments (Japanese scenario) Overcapacity High private & public debt Population ageing Slow productivity growth (lack of structural reform) Natural level of interest rates has come down 10

11 Which central bank will hike monetary policy first? Unemployment rate (%) Inflation (%) 11

12 A new US credit boom? 12

13 First Fed rate hike in 2015 (though strong $ will slow tightening) Fed funds rate closely tracks wage growth Fed Funds target rate Hourly earnings, y/y%, rhs which may soon start rising NFIB survey: % firms planning to raise worker compensation, 6M lead Hourly earnings, y/y%

14 Number of mentions of QE during press conference 30 # mentions of "QE" Jan- 14 Feb- 14 Mar- 14 Apr- 14 May- 14 Jun- 14 Jul- 14 Aug- 14 Sep- 14 Oct- 14 Nov- 14 Dec

15 Some market interest rates pushed into negative territory 15

16 Sovereign QE based on ECB capital key What if the ECB were to allocate 250bn worth of bond purchases based on ECB capital keys? Amount of central government bond purchases as % of current outstanding Estonia Latvia Luxembourg Greece Slovakia Cyprus Slovenia Portugal Finland Germany Malta Netherlands Spain France Ireland Austria Belgium Italy 8.5% 8.5% 6.9% 5.8% 5.7% 5.5% 4.7% 4.4% 4.3% 3.8% 3.7% 3.6% 2.8% 2.7% 12.0% 10.9% 26.8% >100% 0.0% 10.0% 20.0% 30.0% 40.0% 16

17 Bond yields typically increased after launch of QE (Though in many cases the increase wasn t sustained ) Fed QE1 (%) (%) Fed QE2 ECB 3Y LTROs ECB OMT Fed QE Boj APP TLTROs ECB CBPP3 + ABPP Boj QQME? Y Bund yield 10Y Treasury Yield 10Y JGB yield 17

18 Purchasing Power Parity EUR/USD 10 years 10 years PPP EUR/USD 18

19 Is Europe Losing Its CompeOOveness? Georges Ugeux STRICTLY PRIVATE AND CONFIDENTIAL Bruxelles, 15 December 2014

20 European CompeOOveness Is A Myth Euro Area Current Account Balance with the Rest of the World (in Billions of Euros) STRICTLY PRIVATE AND CONFIDENTIAL EU- 28 (23.1) (33.4) (86.5) (144.0) (138.2) (271.7) (84.7) (67.1) (34.2) Euro Area (EA- 18) (12.0) Euro Area (EA- 17) (12.6) 7.4 (141.1) (12.4) Belgium (4.6) (2.2) 6.8 (4.1) (7.3) (6.0) Bulgaria (1.0) (1.3) (2.7) (4.6) (7.8) (8.2) (3.1) (0.5) 0.0 (0.3) 0.8 Czech Republic (5.0) (4.7) (1.0) (2.4) (5.7) (3.3) (3.4) (5.9) (4.2) (2.0) (2.2) Denmark Germany Estonia (1.0) (1.1) (1.1) (2.1) (2.6) (1.5) (0.3) (0.2) Ireland 0.0 (0.9) (5.7) (6.3) (10.1) (10.2) (3.8) Greece (11.3) (10.7) (14.7) (23.8) (32.6) (34.8) (25.8) (22.5) (20.6) (4.6) 1.4 Spain (27.5) (44.2) (66.9) (88.3) (105.3) (104.7) (50.5) (47.0) (39.0) (12.4) 8.0 France (8.3) (10.3) (18.9) (33.7) (25.1) (25.5) (35.2) (44.4) (27.7) Croatia (1.8) (1.4) (1.9) (2.6) (3.1) (4.1) (2.2) (0.4) (0.4) Italy (10.4) (4.6) (12.6) (22.3) (19.9) (44.9) (29.0) (52.6) (47.3) (4.1) 15.8 Cyprus (0.3) (0.6) (0.8) (1.0) (1.9) (2.7) (1.8) (1.7) (0.6) (1.2) (0.3) Latvia (0.8) (1.4) (1.6) (3.6) (4.7) (3.0) (0.4) (0.6) (0.2) Lithuania (1.1) (1.4) (1.5) (2.6) (4.1) (4.2) (1.2) (0.1) 0.5 Luxembourg Hungary (5.9) (7.1) (6.6) (6.6) (7.2) (7.7) (0.2) Malta (0.1) (0.3) (0.4) (0.5) (0.3) (0.3) (0.5) (0.4) (0.1) Netherlands Austria Poland (4.9) (10.7) (5.9) (10.4) (19.3) (23.8) (12.2) (18.1) (18.5) (14.2) (5.0) Portugal (9.2) (12.4) (15.9) (17.2) (17.1) (21.7) (18.4) (18.3) (12.0) (3.3) 0.9 Romania (3.1) (5.1) (6.9) (10.2) (16.8) (16.2) (4.9) (5.5) (5.9) (5.9) (1.5) Slovenia (0.2) (0.7) (0.5) (0.5) (1.4) (2.0) (0.2) (0.1) Slovakia (1.7) (2.7) (3.3) (3.5) (2.9) (4.0) (1.6) (2.5) (2.6) Finland (2.8) (2.7) (2.1) Sweden United Kingdom (25.8) (37.3) (47.4) (66.4) (50.3) (15.6) (19.9) (51.8) (22.3) (73.8) (83.4) Iceland (0.5) (1.1) (2.2) (3.2) (2.3) (2.8) (1.0) (0.8) (0.6) (0.6) 0.4 Norway Montenegro (0.7) (0.6) (0.6) (0.5) FYR of Macedonia (0.2) (0.4) (0.1) 0.0 (0.4) (0.9) (0.5) (0.1) (0.2) (0.2) (0.1) Turkey (6.7) (11.4) (17.2) (25.4) (27.5) (27.1) (8.7) (34.2) (53.9) (37.0) (48.7) Japan United States (459.4) (505.4) (602.2) (637.1) (519.7) (460.5) (269.2) (357.0) (339.8) - - Source: Eurostat, ECB 20

21 European CompeOOveness Is A Myth USA, Switzerland, China and Russia Goods Services STRICTLY PRIVATE AND CONFIDENTIAL Source: Eurostat (2013) 21

22 European Banks Prefer to Finance Governments Despite the Risks Sovereign Exposure Represents Almost 3 Trillion Euros and 120% of European Banks Equity (2) STRICTLY PRIVATE AND CONFIDENTIAL Source: ECB 22

23 Is Europe Labor Market CompeOOve? The European Unemployment Rate vs. the US and Japan STRICTLY PRIVATE AND CONFIDENTIAL Source: Eurostat 23

24 Priority Focus An Anglo- Saxon CompeOOve Economy is not compaoble with a Mediterranean Social Model Urgently needed: competent and courageous poliocal leadership Find Non- Financial soluoons to reinvigorate European Economies Tell the Truth to European CiOzens STRICTLY PRIVATE AND CONFIDENTIAL Embrace InnovaOon and Entrepreneurship 24

25 Belgische economie Anno December 2014 Edwin De Boeck KBC Group Chief Economist

26 België Groei gesteund door rela/ef stevige binnenlandse vraag. Economische groei (reële bbp, Q = 100) Reële paroculiere consumpoe (Q = 100) 105 België Frankrijk Spanje Duitsland Italië EMU België Duitsland Frankrijk Eurozone Investeringsvraag in België (1q2008 = 100) Bedrijven Woningbouw 26

27 België maar onhoudbaar Groei van de werkgelegenheid 100) 115 (2007= Overheidsfinanciën (% van BBP) Primaire uitgaven Totale ontvangsten Gesubsidieerde jobs Totaal Jobs in de marktsector wv. industrie, bouw, en energie 40 Lopende rekening van de betalingsbalans (% van BBP)

28 België Nog zware begro/ngssanering voor de boeg Structurele begroongsbesparing % van BBP) (in Vergelijking met begroongssaneringen in de jaren 80 en Gerealiseerd in Nog te realiseren tegen Reële BBP- groei (in %) BegroOngssaldo totale overheid (% van BBP) Bron:EC, Ameco Structureel primair saldo (% van BBP) 28

29 België (Alweer) posi/eve olieprijsschok.? 130 Olieprijs (in USD, per barrel, Brent) CumulaOef effect op reële BBP na 3 jaar van 10% olieprijsdaling eurozone *

30 België die impact van begro/ngssanering en loonma/ging tempert? België - ConsumpOeprijzen (jaars,jging in %) 6% 5% 4% 3% 2% 1% Algemeen Gezondheidsindex *JaarsOjging in %, jaargemiddelde Reële bbp- groei* 1,0 1,3 1,7 InflaOe* 0,3 0,3 1,2 0% - 1% - 2% Werkloosheidsgraad (eop) 8,4 8,3 7,8 30

31 België maar allicht te weinig om EU2020 jobdoelstellingen te realiseren RelaOeve arbeidskosten (1996 = 100) Werkgelegenheidsgraad van jarigen) (in % Rel. arbeidskost per prod. eenheid (t.o.v. handelspartners) 111 Rel. loonkost per wn. - private sector (t.o.v. 3 buurlanden) EU2020- doelstelling Vlaanderen: 76% EU2020- doelstelling België: 73.2% België Wallonië Vlaanderen Brussel 31

32 Philippe Defeyt: Sortir de l'impasse sociale et économique Supply-side and demand-side policies are closely related (much more than many believe or want to believe) : > supply-side policies are of course necessary to guarantee sustainable prosperity > but bad (short term) demand-side management restricts (long term) investments For the moment : fiscal policies are of the bad sort, even stupid sort

33 Sortir de l'impasse sociale et économique Illustrations : > bad short-term management > bad long-term prospects : loss of confidence, less (public and private) R&D, emigration in some countries, building of an hidden debt (infrastructures), less up to date technologies incorporated... > some demand supporting policies (e.g. housing and energy saving) are good in the short-term (more economic activity) and in the long-term (housing less costly)

34 Sortir de l'impasse sociale et économique Focus on inequality (incomes and property) : > Growing consensus among economist : to much inequality is hampering (short term) demand as well as (long term) supply > e.g. investments in education, social costs of growing poverty (opportunity costs), propensity to consume, less social cohesion...

35 Sortir de l'impasse sociale et économique Focus on pension policies : > Most policies reduce the short and medium term prospects for the young (and less younger) unemployed (even for the most educated) > Many older workers are less keen and capable to adopt new technologies

36 Sortir de l'impasse sociale et économique I fear thus that the (supposed) positive supply-side (longterm) effects of people working longer are wiped off by the short-term (demand-side) and long term (supply-side) costs : loss of confidence, less opportunities, short-term impact on the purchasing power... * * * There won't be enough jobs (of good quality) for everybody whatever is done in the coming years

37 Sortir de l'impasse sociale et économique Recommendations : - massive investments : housing, energy saving, infrastructures - tax shifts : taxing more the "bads", taxing more the incomes other than wages, taxing more the goods and less the services - review the pension policies and support a gradual retirement policy - (gradually) implement a basic income (allocation universelle)