European Central Bankers Don’t Like What They’re Hearing From Trump
Posted by hkarner - 25. Februar 2017
Source: The Wall Street Journal
Political style and economic policy, particularly protectionism, concern pro-globalization policy makers
Two top European central bankers had harsh words about the economic policy coming from the U.S. in remarks Thursday.
The establishment of protectionist policies in the U.S. risks undermining a key element to wealth, the head of Germany’s central bank said.
The blunt language reflects the concern felt across the globe from policy makers as they try to make sense of President Donald Trump’s unconventional economic policy and political style.
“The U.S. erecting trade barriers leading to other countries becoming more protectionist would, I firmly believe, potentially call into question one of the key pillars of our prosperity,” said Jens Weidmann in the opening of the central bank’s annual report.
The new president’s administration has angered many in Germany by accusing Europe’s largest economy of unfairly benefiting from an undervalued euro.
Speaking in London Thursday, the ECB’s chief economist, Peter Praet, also expressed concern about the new U.S. administration. He said some of the noises coming from Mr. Trump’s administration on international cooperation were “worrisome.” Some of Mr. Trump’s complaints about international trade and multilateral institutions reflected “simplistic narratives,” he said, though he added that economic imbalances between countries and regions are real enough.
For now, European policy makers are in wait-and-see mode.
“We still have to see how this new administration is going to behave, or act,” he said.
Mr. Weidmann said the advantages of globalization are “drifting ever further out of focus,” saying this could be true because they aren’t felt so immediately and are harder to grasp than the disadvantages.
“This debate fails to fully consider, however, is that it is international trade and interaction that underpins our prosperity,” he said. “Trade promotes the spread of fresh, productive ideas and new, improved products. It is therefore trade which stimulates productivity, which in turn is what drives wages higher.”
Among the eurozone’s members, Ireland has the closest economic links to the U.S., having pursued a multidecade strategy based on persuading U.S. firms to use the country as their European base.
In a speech to business people in Cork, Central Bank of Ireland Governor Philip Lane said the external threats to Irish economic growth include tax changes that are under consideration following Mr. Trump’s election, as well as protectionism.
“Looking at the wider international picture, given the strong presence of multinationals in the economy, there are…risks related to the potential for changes to broader international taxation and trade arrangements.” said Mr. Lane, who also sits on the European Central Bank’s governing council.