How Europe moves

Original article by Manuela Andaloro published in Italian on Corriere dell’ Italianita’.

COVID-19, Brexit and populism have changed the choices of European Expats 

A recent report in the Financial Times on the impact of COVID on expats has confirmed what many have perceived and experienced for a few years now: the brain drain has stopped.

The EU’s 2019 Annual Report on intra-EU Labor Mobility confirms that although intra-EU mobility has continued to grow in 2019, it did so at slower pace than in previous years.

To date, three quarters of EU-28 expats living in Germany, the UK, Spain, and Italy represent 4.2% of the EU population.

But how have the trends and interests of many expats changed? How has the current pandemic affected the fluctuations? What other causes have an impact on expat choices?

First off, it’s appropriate to clarify the term “expat”. Various definitions can be given to the term, in this analysis we consider “expats” those living and working in a host country by choice or out of non-primary necessity, for a definite amount of time; professionals often with higher education (master degree, post graduate, PhD, etc.). Professionals who have freely chosen the host country for a number of “soft” reasons such as a family, the desire for internationality, and career advancement. Those who, by fortune or merit, had the luxury of choice.

How do European expats experience their choice today?

What factors, dynamics, and political events affect current, upcoming, or future plans to date? What social developments have triggered a remixing of expatriation and repatriation flows?

An interesting interview – part of a recent analysis by the Financial Times – to a return expat expresses some of it: “The lure of the dream expat life had faded” says Tara (not her real name), 38 “Trapped in quarantine meant that the ease of traveling – one of the main reasons for being there – no longer existed. And the rise in anti-foreigner sentiment was another factor” she says, “perhaps because of the increased competition for jobs caused by the economic downturn”. Tara is not the only expat who opts to return home due to the fallout from the pandemic. Significant data points to the fact that we are witnessing a strong upward trend.

To this day, there is no official and structured data on the topic, nor analysis released by official bodies. However, based on recent macroeconomic, political and social frameworks, on EU government data, as well as data from the real estate sector, we can make some hypotheses.

Many factors driving change and second thoughts point to Brexit, to the growth of populism, to the COVID-19 pandemic, and the related perception of how the host country has handled such an emergency. 

In a recent survey on its global customer base, the real estate franchise Knight Frank has revealed that nearly two thirds of expats (64%) say that the lockdown has influenced their decision to purchase a new property in their home country. Of these, approximately 29% said they will return to the country of origin full-time, and 57% are looking for a home to use there in the future.

UK and Ireland – Brain drain and counter-exodus?

Ireland seems to be leading the list of countries of return expats. The most recent figures of the Central Statistical Office show that 28,900 Irish people have returned to live and work from January to April 2020, the highest number in 13 years. And between March and September 2020, the Irish Department of Foreign Affairs  received approximately 8,000 return requests from the Irish abroad.

“Ten percent of our newly built home sales in Dublin in 2020 were from returning expats”, confirms Ray Palmer-Smith of Knight Frank’s Irish office.

The Oxford-Berlin Research study finds that the number of Brits who instead leave the UK for continental Europe is at its 10 year-highest, and about half of all British citizens living in Germany will have dual British and German nationality by the end of 2020.

The numbers are based on data from the Organization for Economic Cooperation and Development. The British who decided to obtain European passports (in Spain, Germany, France, and Italy) increased by more than 500 percent, and by 2,000 percent in Germany.

With expats reconsidering their options, the implications for relocation of businesses, for international schools, and for global corporations seem to be stronger.

Switzerland - reality check necessary?

Switzerland has a very high number of immigrants, about 25% of the resident population. Over 60% of them are highly educated, 85% are EU expats, often attracted in the country by very favorable fiscal conditions: a strategy, however, that other European countries are adopting more and more frequently. 

In 2019, net immigration was around 55,000, on par with the previous year, but down from an annual average of 72,000 from 2009 to 2016.

As for Switzerland as host country of choice chosen by European expats, the trend seems to be stalling. Life quality does not seem to be satisfactory.

The InterNations Expat Insider 2019 survey on expats shows how Switzerland scores 38th in terms of preferred expat country: the study highlights the difficulties and the cold reality of life in the Alpine nation.

The impressions of expats living in Switzerland have deteriorated in all five indices in recent years: quality of life, ease of accommodation, work, family life, and personal finance. “Switzerland has lost 40 places in the past five years. This is a big drop”, admits Malte Zeeck, founder and co-CEO of InterNations. Affordable health care (61st) and childcare (35th out of 36) are also major issues for expats .

While Switzerland was a major destination for career expatriates just a few years ago, it appears to have lost some of its appeal: around a fifth of respondents express great dissatisfaction .

To date, we can only hypothesize that the Covid crisis will have a further role in confirming a trend that still seems to point to the fact that fewer expats in recent years choose Switzerland as a new destination, or choose to stay there.

Germany - efficiency and humbleness

Germany has a significant and powerful economy which allows expats to have a high quality of life. The population of expats in the country has gradually increased over the years, and to date, expats in Germany represent 3.7% of the population (as opposed to 15% of total immigrants). The level of education in the country is high, as are public infrastructure and health systems.

A recent analysis of the country by Bloomberg shows how Germany tends to often be painted either by outsiders or by insiders in superlative terms  that are however mutually exclusive. A dichotomy, but neither extreme captures the real picture. Externally an enigmatically strong, orderly, efficient, or even enlightened country? Internally painted as a country that lives in the past, slow and calcified? Observations that often say more about observers than about the observation itself.

Germany is an economy, a society, and a culture extraordinarily good at cushioning the blows, but at the cost of giving up reinvention, innovation, and adaptation.

Unfortunately, various German institutions reinforce the tendency towards scarce innovation. The strong and traditional professional training of students proves to be useful to provide highly skilled workers for a specific career. But it does not help to prepare young Germans for the continuous challenges posed by the Fourth Industrial Revolution and the need for life-long learning. 

There is a strong humbleness in Germany: the country has sadly learned from history that “exceptionalism” is not only wrong, but dangerous. And it acts accordingly.

The Expat Insider 2019 analysis points out that the country ranks fourth in the world in terms of work, but social and language barriers often don’t make expat experiences easy.

Germany ranks third out of 64 for job security but among the bottom 10 for ease of acclimatisation. As for families, it seems that only Austria and Switzerland have an even more hostile attitude towards families with children.

A study by Destatis , the German Federal Statistical Office, confirms a strong decrease in arrivals and departures recorded in the first half of 2020; a decline recorded in March that is only due to the pandemic, while the data in recent years had shown a permanent trend in expat arrivals, and increasing if we consider the entire migrant population (2019 data).

For many, both inside and outside Germany, the efficient management of the pandemic has highlighted the country’s appeal: low unemployment, a generous and accessible healthcare system, effective political leadership and a stable society .

Italy - the new era that attracts foreign talent and return expats

Italy has almost 10% of the foreign population in 2019 , in third place after Germany and the United Kingdom, and followed by France and Spain .

Expats from all over Europe settle in Italy and represent almost 6% of the European population in the country (50% of the total number of immigrants, EU data, Istat, statista).

However, in expat polls, at least up to 2019, Italy does not score excellent results.  The cost of living in Italy is “higher than in many other EU countries, but different depending on the region and the city”.

The vast majority of European expats in Italy is concentrated in Lombardy, and in particular in Milan, with 15% of immigrants. The latter has received, from 2015 to date, an inexorable flow of investments in various sectors, including those of EU expats.

As for returning expats, the COVID crisis seems to have played a key role, in combination with the recent fiscal policies implemented by various European governments, Italy among the first to offer interesting tax benefits.

What emerges from the research COVID-19 - L’impatto sui giovani talenti (the impact on young talents) – conducted by the PWC Study Center on the joint initiative of Talents in Motion, PWC, and Fondazione con il Sud (foundation for the South) through the LinkedIn platform during the acute phase of the health emergency – is clear. The aim of the study was to understand how the pandemic has affected lifestyles, career paths, and expectations of Italian talents with an international profile. The results give a strong indication: over 25% of Italian expats abroad will return or have returned to Italy, and almost 80% are considering this option.

The actions implemented by the Italian government are perceived as more effective than those of the European Union, in responding to the COVID-19 crisis. The Italian government’s response is widely perceived as one of the best after the German one.

Will life as an expat in Europe as we know it today survive COVID-19, populism and Brexit?

Health concerns and travel restrictions mean that more expats in Europe and around the world return home.

All too quickly, COVID has stripped many elements of life from expats. Families in other countries suddenly seeming too far, the fear of being confined in a country where anti-COVID measures are not efficient, and the growing populism that could increase due to the inevitable economic crisis are all factors that have exponentially increased the interest of many in moving or returning to their country of origin. International companies will most likely continue to transfer talent across the world , perhaps in less amounts, or especially people in leadership positions. But even so, the constant flow of expats returning home is evident according to government data, recruitment indicators, and to real estate agents of the countries where many of them return. While the figures are still hard to come by, clear and strong signs of lasting change are beginning to emerge.

M.

(info@smartbizhub.com)

Original article published in Italian on Corriere dell’ Italianita’.

Brexit, a pause for breath?

Article by Manuela Andaloro, contribution by Laura Prina Cerai, Senior Investment Advisor, Altrafin AG

It’s an autumn afternoon in 2008, in London. I am sitting in a car next to Jeff, the CFO of the company I work for. I am part of the management team of an international financial services company with offices in London and Singapore. We are going to a meeting not far from London. We are near Maidenhead, a thriving residential town near the more industrial Slough, or the more well-known Windsor, north-west of the capital of the United Kingdom. Jeff is British, fair, calm, competent and empathic. We have a good working relationship. We talk about life in the city centre, Bayswater and Notting Hill, the area I live in, an Italian in her thirties with a ten-year career under her belt. We also talk about life outside London, where Jeff resides with his family; he’s a middle-aged man with almost teenage children.

London, cosmopolitan city. Over 300 languages are currently spoken in London schools.

“London is a truly cosmopolitan city, there is a great social integration, something to be proud of”, I comment at some point. “True that, but I think this is something people rarely see in us. Brits are not often recognised the merits of being open and welcoming towards immigration. I mean, there are different kinds of migrants. All this welcoming and open attitude…. I am afraid that at some point it may come back to haunt us”, answers Jeff with an emphasis that makes me now understand some of Brexit’s roots. I ask what he means by that. “You see, we don’t all really feel European, for starters, we drive on the right side of the road!”. Jeff is laughing but I catch some frustration in his tone. I have many thoughts in my mind, but we suddenly change the subject and go back talking about the client we’re about to visit.

This conversation came back to my mind the day after the referendum on Brexit, on 24th of June, 2016, in a moment of surprise for an unexpected result. I am reading one of the most precise reports ever written about the “unseen” London, “the stories you never hear, the people you never see” (ed. “This is London” by Ben Judah). “This is London in the eyes of its beggars, bankers, coppers, gangsters, carers, witch-doctors and sex workers. This is London in the voices of Arabs, Afghans, Nigerians, Poles, Romanians and Russians”. A work that sheds light upon a reality that I have not fully grasped during my 5 years in London. I have been caught up in my business life, or private life in the picturesque Notting Hill, between conferences and client meetings in the City, awards dinner in Park Lane and business trips. Like me, millions and millions of people are not fully aware of this reality.

The Eastern Europe immigration policies allowed by Cameron come back to my mind, along with the stories, the lives that we hardly notice, but actually have a vital impact on the culture and politics of a country.

Immigration has been leveraged as a hot topic and a sore point in “Leave” campaigns; the ONS (the Office of National Statistics), ranked it as the main concern of the British people in the spring of 2016.

Leave campaigns have encouraged that vision, by declaring that staying in the EU would mean 5.23 million more immigrants entering the country. This allegation was later found to be false.

In the weeks leading up to the referendum, politicians in favour of Brexit, such as Penny Mordaunt and Michael Gove, claimed (once again, falsely) that Britain would be exposed to a Muslim wave of immigration from Turkey should this latter become part of the EU.

The Committee on the Elimination of Racial Discrimination, a UN body, accused British politicians of fuelling racial hatred and a sharp increase in racist crimes during and after the referendum campaign.

In the 2018 book “Ctrl Alt Delete: How Politics and the Media Crashed Our Democracy”, Gove told the author, Tom Baldwin, that if it had been just up to him, the referendum campaign would have been different. Really?

In 2017, Theresa May promised to drastically reduce immigrants by “tens of thousands” and to suspend the freedom of movement – the right of European citizens living in the EU to move to other member states. Eventually, any such intention was abandoned during the negotiations.

But in the middle of 2018, the sore point was no longer immigration. With Brexit around the corner, more serious problems were drawing all the attention. According to the ONS statistics of the spring of 2018, the new concerns of the British were housing, the cost of living, health and social security.

Every medal has two sides.

The “Remain” party was no less mistaken in terms of predictions. When the “Leave” campaign prevailed, Prime Minister David Cameron resigned, after having stated for months that he would remain.

Former Chancellor George Osborne said a victory of the “Leave” coalition would have lead to an “immediate and profound shock to our economy”. That shock would have caused an immediate recession and led to the loss of half a million jobs. Eventually, the economy did not fall sharply and the level of unemployment remained unchanged.

Other predictions, such as those of the Bank of England, the International Monetary Fund, the Organisation for Economic Cooperation and Development and the Institute for Fiscal Studies, accurately predicted slower growth, in line with the other rich G7 countries.

Around the end of 2018, the British economy reached the decade’s record low, and by then the pound had lost over 14% of the value it had before the referendum.

To date, many multinational companies have moved abroad or are in the process of doing so and various businesses and sectors are beginning to struggle.

Maybe not exactly an apocalypse, yet not even a signal that Britain is experiencing what Boris Johnson predicted it would be a “titanic success” with Brexit. (“Titanic success”, by Boris Johnson).

Between predictions and confusion, one thing is beyond doubt: if Brexit does happen, it will be all but the vision that was originally sold to the electorate who had requested it.

The state of affairs shows that, as in many other countries, the “Remainers” and “Leavers” represent different elements of the same country, two sides of the same medal. Sometimes war is fought within one’s self.

The major public debate of the last two years has separated families and broken friendships, but it has also brought to light the bonds that create and rule a country.

The use of history

“Brexiteers” have often referred to the concept – and the dream – of “Independence”. It is a noble, commendable dream, indeed. It is founded on Britain’s historic role as a proud nation that has repeatedly fought for its freedom. In the 18th century Britain resisted the Bourbon dream of European hegemony. At the beginning of the 19th century, the British people helped liberate Europe from the Napoleonic domination, they confronted Nazism in Germany in 1940.

But this is not 1939 or the Battle of Waterloo in 1815. History is always in the making.

The European Union is not a dictatorship, as was that of Napoleonic France. Nor can it be compared to Nazism, an irresponsible, superficial analogy that has become a bad cliché and shows an unforgivable lack of understanding of the true horror of recent European history.

Is such a language acceptable today, when all European partners are democracies and none of them represents the least threat to take up arms against Great Britain?

The political class and the global order

Where are today personalities like Churchill and Thatcher? Where are the statesmen and stateswomen who made the United Kingdom great? The British political class of today is offering a disheartening scenario: we are witnessing the decline of the elite of a nation that once dominated a vast empire from Canada to Australia. And the consequences can involve all of Europe.

The Brexit agreement reached between Theresa May and the EU in Westminster was rejected three times, and so did all the suggestions and hypotheses of an alternative. It was a No to a soft Brexit, No to its revocation, No to a second referendum, but also a No to the no deal option (leaving without any agreement).

At the beginning of the negotiations, Theresa May laid out some guidelines she later could not comply with and ended up trapped into them. Brexit means the end of the single market, the customs union, freedom of movement, European jurisdiction, she said: but she did not explain to the country the necessary trade-off between sovereignty and prosperity.

The more one gains in terms of political independence, the more one loses in terms of economic integration.

Jeremy Corbyn’s labourists struggled and failed to present any credible alternatives in the last two and a half years. Corbyn’s contradictions on Brexit are due to an electorate so vast and diverse that it ranges from liberal metropolitan voters who eat an avocado toast in London cafes to workers in the north who live with frowned-upon immigrants, often less educated. Unfortunately, from the point of view of the Remainer labourists, nothing was accomplished.

The problem is perhaps wider and has its roots in the changes of the ruling classes. In the past, in Britain, as in many first world countries, the most brilliant members of the wealthiest families embraced the political career, something that was considered very prestigious up to a few years ago. But in recent decades those who had a choice clearly preferred to dedicate themselves to finance, large companies, the corporate world and entrepreneurship.

The lesson that Britain has learnt over the last two years is that the country works much better inside the EU than outside. Within the Union, the UK is highly respected – it was British politicians, for example, the ones who set the rules of the single market – and has a say in any reform, certainly more than as a hostile neighbour.

This is perhaps one of the most important virtues of the EU, in an age in which we regard with concern the new forces that lead towards the frightening collapse of the global order that was reached after the devastating world wars. The emergency before the eyes of everyone is that of an aggressive system of protectionist sectors.

Under these new alarming circumstance, it is very dangerous to rely solely on the World Trade Organization (WTO). Yet the WTO is fundamental to the economic model advocated by the Brexiteers. The WTO is losing its ability to ensure a free market for goods and services finding itself under the attack of Trump’s America and Xi Jinping’s China.

In the age of Trump and Xi, relying on the WTO to ensure free trade is comparable to relying solely on the United Nations to protect human rights: they both can provide well-intentioned resolutions but, alone, they are powerless.

The promoters of the “Leave” campaign said that Brexit would be “quick and easy”. They said trade agreements with all EU countries would be ready before leaving the Union. As Liam Fox put it, “the free trade agreement that we will have to do with the European Union should be one of the easiest in human history”.

Nothing seems to be easy today.

They made exaggerated and false declarations about Britain’s post-Brexit finances, using methods that were later proven illegal, using obscure funding.

Perhaps we should go back to a simple, quiet and humble proposal, as common sense often is. Perhaps we should pause Brexit and take a break for reflection.

We are talking about one of the most important decisions ever made, with the biggest long-term consequences that the British government has ever experienced since the Second World War.

A decision that will affect the lives of future generations in a profound way.

Any psychologist would agree on what the worst time to make important decisions is: the one in which one suffers from an emotional collapse or a breakdown, that is exactly the state in which many British politicians are at the moment.

The decision on Brexit, now that all the cards were laid on the table, must be made with absolute and thoughtful calm.

Brexit in a snapshot.

The roots of Brexit are to be found in the traditional British resentment towards Europe. Not surprisingly, one of the most famous quotations of the legendary Prime Minister Winston Churchill is: “Every time we have to decide between Europe and the open sea, it is always the open sea we shall choose”. Recently, the reasons for Brexit lie in a general dissatisfaction that’s spreading throughout the majority of the population, along with a good dose of new nationalism, flanked by unscrupulous populists with demonstrably false recriminations and manipulation of the social media and local press, which is more than a business for journalists.

In the United Kingdom, the deep disagreements between the population and the parliament have led to a political stalemate, precisely when England and the rest of Europe need courageous reforms in many areas. Economists have long warned about the social and political effects of the “new economy”, low interest rates and globalisation. But until now, European politics has lagged behind without adapting to change, trapped by populist propaganda looking back to bygone times. But the world does not wait, while Europe withdraws on itself. The consequences are dramatic: the old continent is lagging behind the US economy and emerging markets because of its archaic economic structures.

At present, June 2019, conservative candidate Boris Johnson seems to be the favourite for the top job, even after his recent domestic drama, but world investors are being forced to ask what this means for the only form of Brexit that could quickly disrupt the economy and frighten the markets — a disorderly Brexit on October 31, Halloween.

Mr Johnson has failed to give a categorical guarantee that the UK will leave on that date, saying only that it is “eminently feasible”. However, he has said unequivocally: “If it comes to a choice between no deal, and no Brexit, I would have to back no deal”. (BORIS JOHNSON, BBC WEBSITE, JUNE 19, 2019).

His rival Jeremy Hunt, who might become prime minister by default if Mr Johnson were to drop out, has been more nuanced. Like Mr Johnson, he prefers no deal to no Brexit, but has emphasised the importance of achieving Brexit through a “good deal”, adding: “I would not pursue no deal, with all the risks it involves, if there was the chance of a good deal.” (JEREMY HUNT, BBC WEBSITE, JUNE 19, 2019).

The risks of political miscalculation before October 31 certainly seem larger than they were in the run-up to the initial Brexit date of March 29. Then, parliament was ready and able to exert its natural majority to prevent a no-deal Brexit. Furthermore, both prime minister Theresa May and the EU were willing to accept a long postponement of Brexit. None of these safety valves seems to be in place this time. The markets are reluctant to accept that the next deadline on October 31 might be the real one.

Manuela Andaloro

(info@smartbizhub.com)

 As published in Focus ON’s “on deep” story, May 2019, download original article in Italian here.

Post-liberal: order and value

Article by Manuela Andaloro , published in Focus ON’s cover story, February 2019, download original article in Italian here.

The single currency has come a long way from the initial dream in which many did not believe. From the first discussions in 1960 on an economic and monetary union, to date, the currency of 340 million Europeans, used by another 175 million people in the world. Its success? It is about combining national identities with global ethos and customs.

One of the skills I have learnt working for twenty years for various companies and in three different countries (ed. Italy, United Kingdom, Switzerland), is being able to read people, finding the key to establishing human relationships based on understanding, trust, empathy: from team members and employees, to bosses, customers, various stakeholders with whom in the last two decades I have dealt and, often, from whom I had the pleasure of learning something.

When dealing with diversity, there are three fundamental aspects one must immediately consider, beyond language and working skills, cultural aspects, or similar experience:

1. A realistic awareness of one’s value, and the impact it has on others, on business and on society. 

2. Understanding the importance of constantly switching from looking at the big picture to paying the attention to details.

3.  Turning a fixed mindset into a growth mindset while staying humble – an essential skill.
   

This is what I call emotional competence: integrated skills that are not bound to cultures, nationalities, business ranks, age, generations, education and training. I am talking about skills that can be learnt every day, that make the difference, in my opinion, between those who bring in value, from those who subtract value in the medium and long term: I am thinking of human relationships, businesses, and companies.

Whether we are talking about the latest strategic business plan, a political initiative, the merger of two institutions, or the interpretation of financial statements, the emotional competence of the involved stakeholders is directly proportional to the success that they will achieve in the medium and long term.

Emotional competence and European single currency.

Twenty years ago a new currency was born, it was the single currency of what would be later known as the eurozone: the euro.

 It did not exist yet in the form of coins and notes we all know today, which were introduced a few years later, in 2002. In that year, the united currency became tangible for millions of Europeans and the old German marks, French francs, Italian liras, Spanish pesetas, and all the ancient variegated currencies of Europe became History.

Mario Draghi, President of the European Central Bank, once compared the euro to a hornet – a “mystery of nature” that should not be able to fly, but somehow, it does. 

Draghi used this metaphor during the tumultuous Greek debt crisis in 2012 when many wondered if the end of the euro was close.

Two decades after its birth, the euro flies high. Member States have grown from 11 to 19, and the size of the European economy has risen by 72%, to 11.2 trillion euros, second only to that of the United States, turning the positioning of the European Union into a global force that should not be underestimated.

The last two decades have often been turbulent ones for the single currency, from an initial exchange rate against the dollar of $ 1.16, the euro slipped to a nadir of only $ 0.853 in 2001, during the “dot-com bubble” that caused clamorous slips to digital investors of that time. From that moment on, it was a bull market until reaching a peak of $ 1.58 in 2008, just before the financial crisis.

This was the period when rappers like Jay-Z and models like Gisele Bündchen insisted to be paid in euros instead of dollars.

The euro maintained a favourable exchange rate against the dollar during the financial crisis, but a long decline began, once again, in 2014 due to fears related to the eurozone’s rupture.

A key factor was the traditionally interventionist behaviour that the European Central Bank adopted at that time, aimed at supporting economic activities in the areas affected by the recession – an intervention that normally suppresses the relative value of currencies.

Today the euro is stable at around $ 1.14, a position similar to that of twenty years ago.

But how successful was the single currency?

If we look at the annual Eurobarometer survey, the answer is, surprisingly, very successful, given the political and economic turmoil of recent years.

Faced with the question “has the euro been positive or negative for your country?”, on average, the citizens of the analysed European countries have answered positively in 64% of the cases. The same survey in 2002 resulted in only 51% of the population being satisfied with the single currency. The same research in 2018 concludes that in some countries of the block, three-quarters of the population has confirmed that the euro was “a good thing”.

But there are other parameters to take into account, and the great majority of them paints a positive picture.

The single currency is used today by around 340 million people in 19 countries. The euro is today a global reserve currency, stocked by central banks and multilateral institutions, such as the International Monetary Fund (IMF).

The Eurozone inflation has been kept under control, remaining on average at 1.7% in the last twenty years, just below the 2% policy imposed by the European Central Bank.

Yet, some economists are not convinced that the euro has been a success, due to the fact that since 2000 the GDP per capita in the eurozone has had a lower yield than expected (purchasing power being the same), growing by 15%, less than the US (19%) and the United Kingdom (20%).

A relative sub-yield.

Yet, this event has significantly less importance than the fact that the single currency has come out unscathed after the serious existential crisis experienced from 2010 to 2015, when the imminent crumbling of the eurozone was feared, at a time when countries like Greece, Italy, Ireland and Portugal ended up under the paralysing pressure of the bond market.

 The disaster was avoided thanks to an intentionally vague promise of Mario Draghi, in July 2012, that “we will do whatever it takes” to keep the united market together.

Some regard this episode as evidence that the creation of the single currency was a mistake, that binding economies with different levels of productivity and local institutions, along with a common currency with a single interest rate, would be a doomed project and would create financial, economic and social tensions.

“The euro’s main achievement is still being here, and it’s very likely that it’s here to stay”, writes Constantine Fraser, a European policy analyst at TS Lombard, and he adds “This slightly mad project of a supranational currency union with wildly different economies within it has lasted 20 years and has brought these economies and countries closer together”.

In many cases, older Europeans do not feel European “enough”, but the generational change and the advent of the new generations, grown up in an international environment favourable to integration, will promote the European Union. The eurozone must go on, because if it stopped, it would fall. There is a political will to make sure it continues to grow, but it is still uncertain how quickly and with what incremental changes.

Ten years after recovering from the financial crisis, political instability is now the biggest and most unpredictable threat to the eurozone. The toughest challenge for the European Central Bank during its third decade will be to secure the healthy survival of the union, threatened by the tumultuous background of a significant populist pressure rather than the stress of the financial markets.

Going back to the skills mentioned at the beginning and the much needed emotional competence, let us look at the big picture.

For several generations, the world has been governed by what we now call the “global liberal order”. Bombastic words, whose real meaning is that all men share some basic experiences, values ​​and interests, and that no group of men is inherently superior to another. Cooperation is therefore more favourable than conflict. All men should work together to protect their common values ​​and advance their common interests. The best way to promote such cooperation is to facilitate the circulation of ideas, goods, money and people across the globe.

Although the global liberal order sometimes poses difficulties and problems, it has proved its superiority over all other alternatives. The liberal world of the 21st century is more prosperous, healthy and peaceful than ever in human history. For the first time in history, hunger kills fewer people than obesity, scourges kill fewer people than old age, and violence claims fewer victims than accidents.

We have not died when we were 6 months old thanks to the medicines discovered by foreign scientists in foreign lands. At the age of 11, we have not been erased by a nuclear war, thanks to agreements made by foreign leaders at the poles of the planet, agreements that the new leaders of America and Russia have recently questioned and the expected outcome within 6 months does not look positive.

We should ask those who express their will to return to the golden pre-liberal or even colonial ages, to mention in which year exactly mankind was in better shape than in the 21st century. Was it in 1918? Or 1700? Or in the Middle Ages?

And yet, people all over the world seem to have lost their faith in our liberal order.

Nationalist and religious opinions that favour one group over the other are popular again. Governments seem to increasingly restrict the flow of ideas, goods, money and people. Walls are created, both physical, mental and in the virtual space. Immigration does not persuade, fees and duties increase.

 What kind of global order can replace the current one? So far, there seem to be only sketchy and untested solutions at a national level – think of the disastrous example of Brexit –, aimed at promoting the interests of a particular country. But nobody seems to envision how the world, together, should work. Leaving imperialism and global conquests for the history books and science fiction films, what solutions do we have and will leave to our children for the generations to come?

 There are real severe threats at the gates of our civilisation. They grow on a global scale, they care little of national borders, and they can only be resolved through global cooperation: nuclear wars, climate change, artificial intelligence and associated technological risks.

However, this is not yet our destiny, we still have a choice. We are still in time to propose a realistic global agenda, beyond commercial agreements. We have the choice to choose, to promote or to reject the leaders – in business, in society, in politics, among our acquaintances – that demonstrate not to have qualities such as understanding the big picture, empathy, humility, that are not aware of the impact of their actions on those who have less means to understand the reality, or worse, who understand and exploit it for their own purposes.

Let us remember the skills of those who, at any level, in any sector, bring in value and have the intrinsic qualities of true leaders: emotional competence.

New identities and solutions are formed in times of crisis. The euro has shown it, so has history.

Manuela Andaloro

(info@smartbizhub.com)

 As published in Focus ON’s cover story, February 2019, download original article in Italian here.