The forum : news from the Brussels Economic Forum. Issue 1, May 2007.
Date: 2011-07-25
Institutions: Directorate-General for Economic and Financial Affairs
Subjects: economic policy, financial policy, monetary integration, monetary union, serial publication, single market

THE F   RUM

E U RO P E A N
COMMISSION

News from the Brussels Economic Forum

Issue 1  |  Thursday, 31 May 2007

Message from China
Soft landing for global imbalances 
while maintaining sustainable 
growth in the PRC

Page 2

Euro-area statement
Metalworking metaphors from 
the Commission as the euro-area 
economy forges ahead

        Page 3

World trade
Pascal Lamy explains how 
to spread the beneﬁ ts 
of opening up trade

Page 4

Communication  
high on the agenda   

“

visible  protection  and  stability  to 
our  economies  and  low  and  stable 
inflation  rates  bring  real  benefits 
to  our  businesses  and  citizens  and 
EMU has also powered the process 
of European economic integration. 

But  despite  these  successes, 
divergences  in  competitiveness, 
inﬂ ation  and  growth  performance 

Debate is the key word here.

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Commissioner  for  Economic  and  Monetary  Affairs,  Joaquin  Almunia  shares  his 
views on the purpose and beneﬁ ts of the Brussels Economic Forum.

This  is  the  eighth  Brussels 
Economic Forum and the largest 
yet. What can we expect from this 
event and what do you believe is 
its added value for Europe?

Above  all  I  see  the  BEF  as  a 
c o m m u n i c a t i o n s   e v e n t ,   a n 
opportunity  to  debate  in  detail  on 
the important economic topics in the 
EU  and  more  widely.  Debate  is  the 
key word here. Economic issues are 
complex and pervasive and decisions 
taken in Brussels have an impact at 
national level, the same way national 
economic policies have a wider impact 
on the whole euro area, for example. 
For  this  reason,  it  is  vital  that  those 
economic  issues  that  drive  EU  and 
national  economic  decision-making 
are  understood  by  many  sectors  of 
society, including the general public. 
This is even more true in the context 
of  Economic  and  Monetary  Union 
where  actions,  or  lack  of  action,  in 
one  region  can  have  increasingly 

signiﬁ cant consequences elsewhere.

Furthermore,  we  should  not  shy 
away  from  differences  in  opinion 
and  interpretation.  Managing 
whole  economies  is  not  an  exact 
science  and  in  this  uncertain 
context,  informed  debate  can  be 
as important as the actual decision-
making. So the added-value of the 
BEF is the opportunity to address an 
audience drawn from many sectors: 
social  partners,  industry,  the  media 
and academia, as well as politicians 
and  economists  –  and  to  engage 
them  in  discussion  and  debate  on 
the important economic issues and 
challenges we face.

And  what  is  particularly  topical 
about  the  Forum  themes  this 
year: global adjustment and EMU 
– why are these ‘hot’ now?

Not so much ‘hot’, but rather ‘hotter 
than  before’  is  a  better  description 

–  these  issues  have  been  bubbling 
away  on  the  economic  hotplate 
for  some  years.  Global  imbalances 
are  a  threat  to  all  especially  if  they 
were  to  unravel  in  disorderly  way 
creating  turmoil  and  dragging  the 
world economy down. Of course, the 
European economy is more resilient 
nowadays as a result of EMU; recent 
oil price volatility, the Iraq war and the 
9/11 events have had little effect on 
our  accelerating  economic  growth. 
Still,  a  global  economy  demands 
closer  coordination  at  international 
level  –  where  the  euro  has  rapidly 
emerged as the world’s second most 
important  global  currency.  That  is 
why listening to our global partners 
and sharing our concerns is important 
– and this is part of the BEF.

Adjustment and integration in EMU 
is  –  it  is  fair  to  say  –  something 
that euro area countries must work 
harder to achieve. There is much to 
be positive about, EMU is providing 

remain  in  the  euro  area.  If  we  are 
to improve the functioning of EMU 
and  optimise  the  beneﬁ ts  it  offers 
then  we  must  understand  the 
underlying causes of these different 
degrees of adjustment. This is even 
more  important  with  euro  area 
enlargement on the horizon.

Looking  ahead,  what  might  we 
be discussing in the BEF in years 
to come, what are the economic 
issues on the horizon?

The  positive  impact  of  the  euro 
on  macroeconomic  stability  and 
economic  integration  are  among 
the  many  tangible  beneﬁ ts  derived 
from introducing the single currency 
nearly ten years ago. 

But  it  is  clear  that  the  euro  and 
EMU  as  a  whole  face  challenges. 
Raising potential growth, enhancing 
adjustment to economic shocks and 
putting Europe’s ﬁ scal house in order 
before the ageing challenge kicks in 
are  amongst  the  most  important 
ones for the coming years. Ensuring 
a successful enlargement of the euro 
area is another.

Understanding  these  challenges  is 
the  ﬁ rst  step  to  overcoming  them. 
As  monetary  union  approaches  its 
ﬁ rst  decade,  the  Commission  will 
intensify  its  analysis  of  EMU’s  past, 
present  and  future,  with  a  view  to 
identifying the priorities for action in 
the years ahead. Economic dialogue, 
of which the BEF is one element, will 
be critical in deﬁ ning these priorities 
■
and actions. 

Despite the warm weather and early ﬂ owers so far 
this year, climate-change induced growth is not the 
subject of DG ECFIN’s Spring Forecasts presented 
over the page. But they are concerned with 
growth, and the climate for growth, that Europe is 
predicted to enjoy for the next two years...

Read more on Page 3

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A short history 
of the BEF: 
a growing asset

The  origins  of  the  Brussels 

Economic  Forum  go  hand 
in  hand  with  the  creation 
of  the  single  currency.  The  leap 
of  faith  that  euro  area  Member 
States took in 1999 was preceded 
by  a  decade  of  seemingly  quiet 
diplomacy  to  build  the  trust 
needed to launch Economic and 
Monetary Union. However, once 
the  single  currency  arrived  and 
the  strictures  of  EMU  began  to 
be felt at national, regional and 
local levels, a different approach 
was  needed.  The  challenges 
and  opportunities  of  Economic 
and  Monetary  Union  had  to  be 
explained to a wider audience. 

“We  saw  the  growing  need  for 
public  debate  at  a  European 
level,”  recalls  Ludwig  Schubert, 
Deputy  Director-General  of  DG 
ECFIN at that time. “The inﬂ uence 
of  EMU  and  the  single  currency 
on  people’s  lives  was  rapidly 
growing  then,  and  remember, 
we  were  strengthening  our 
surveillance  activities  and  it  was 
important  that  these  were  not 
seen  as  something  happening 
only  in  technical  committees 
behind  closed  doors.  It  became 
critical to open the discussion on 
the EU economy to a much wider 
audience  if  the  short-term  rules 
and  market  sanctions  of  EMU 
were to be seen as challenges and 
opportunities  rather  than  mere 
restrictions”.

The  vision  for  the  BEF  was  to 
bring  together  a  wide  mix  of 
participants:  social  partners, 
academics,  economists,  the 
media  and  policy-makers  from 
many  levels  of  government  and 
EU  institutions  –  including  non-
EU  partners  as  well.  From  the 
limited conﬁ nes of a conference, 
these participants could then act 
as multipliers to take the EU level 
issues, ideas, proposals outwards 
to  national,  regional  and  local 
actors and citizens whose support 
is  vital  for  EMU  to  succeed  and 
for Europe to prosper. The aim of 
the BEF was never discussion for 
discussion’s  sake;  it  was  always 
the  wider  dissemination  of  the 
important  issues  that  the  EU 
faces, in particular the economic 
challenges and opportunities. 

continued on page 2

 
 
 
 
 
 
 
Who’s who at the BEF  |  Wu Xiaoling

The people’s banker: a steady hand

2

The impact of currency asymmetry

At  the  2006  BEF  Professor  Fan  Gang  of  the  National  Economic 
Research  Institute  in  Beijing  gave  a  robust  defence  of  China’s 
approach  to  ‘global  imbalances’.  In  the  opening  presentation  he 
asked how much revaluation of the Yuan would be needed to solve 
the trade deﬁ cit problem, 500%? 1000%? He went on to point out 
that it is untrue that China does not import, it just does not import 
from the US! Elsewhere, China was running trade deﬁ cits with most 
Asian economies as part of Asian supply chains. In Professor Fan’s 
view, the root cause of the problem lies in ‘currency asymmetry’ and 
the constant tendency of the US Dollar to undergo devaluations.

Wu Xiaoling will contribute to Session I of the BEF (31 May, 10.00-12.50), 
speaking  on  China’s  plans  to  contribute  to  a  soft  landing  for  global 
imbalances while maintaining sustainable growth in the PRC.

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Deputy Governor of the People’s Bank of China (PBC) since 2000, Wu Xiaoling has 
a distinguished history as a practising and research economist in the PRC.

Getting the facts right

Graduating with a Master’s in 

economics 1984 she became 
Deputy  Director  General  of 
the  PBC  Applied  Theory  Research 
Office  in  1985  before  gaining 
communication  experience  as 
Deputy Editor in Chief of the PBC’s 
Financial  News  publication  from 
1988  to  1991.  After  three  years 
as  Deputy  Director  General  of  the 
Financial  Reform  Department,  Wu 
Xiaoling  became  Director  General 
of the Research Bureau, a post she 
held until 1995.

Subsequent positions as in the State 
Administration of Foreign Exchange 
and  President  of  the  Shanghai 
Branch of the PCB followed before 
taking  up  her  current  position    as 
Deputy  Governor  where  she  has 
speciﬁ c  responsibilities  within  the 

People’s Bank of China for monetary 
policy.

While an experienced and practising 
economist and central banker, Mme 
Wu Xiaoling has not abandoned her 
research activities and is a Professor 
in the Graduate School of the PBC, 
at  Qinghua  University  and  at  the 
Renmin University of China.

Slow but steady

China’s  massive  trade  surplus 
with the US has produced foreign 
exchange  reserves  topping  one 
trillion  dollars.  In  an  economy 
awash  with  greenbacks,  Wu 
Xiaoling  is  responsible  for  the 
policies  for  managing  interest 
and  exchange  rates  to  reduce 
pressures on the forex market and 

curb inﬂ ation. China currently has 
the highest interest rates for eight 
years and commercial bank reserve 
requirements have been increased 
five  times  in  eight  months  in 
attempts  to  slow  investment. 
However, in the face of intense US 
pressure to liberalise the Yuan, Wu 
Xiaoling is holding fast to a slow-
but-steady approach to correcting 
imbalances  –  politely  warning 
critics at the 2007 World Economic 
Forum in Davos to back off and put 
their own houses in order.

Commenting on ‘global imbalances’ 
in  2006  Wu  Xiaoling,  clearly  a 
master  of  understatement,  wryly 
remarked, “A deﬁ cit in international 
balance  of  payments  is  not  good, 
but too big a surplus is not helpful 
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In Japan, emerging Asia and oil-exporting economies in the CIS and 
in the Middle East, imbalances continued to widen in 2006. China’s 
global  current account surplus increased sharply in 2006 – by almost 
50% compared to the previous year – to a record USD 238.5 billion, 
thereby signiﬁ cantly exceeding the previous year’s record of 9.1% 
of GDP. Oil exporters’ aggregate current account surplus increased 
further in 2006 (to USD 422 billion) and now represents the largest 
counterpart to the US deﬁ cit. Source: European Commission, Annual 
Report on the Euro Area 2007, p. 39

A short history 
of the BEF continued

After  two  years  of  preparation, 
the  first  Brussels  Economic 
Forum was held in 2000 with 500 
participants. It set the ambitious 
tone  by  attracting  high-level 
speakers from across the EU and 
the  world’s  politico-economic 
community. Since then, the rising 
year-on-year participation in the 
Forum is a sure sign of its success. 
Eliane Van Tilborg, who was one 
of  the  BEF’s  main  organisers  for 
many years, is proud to remember 
its  growing  success:  the  1000 
mark was passed in 2005, and in 
2006, 1467 people registered (See 
graph). However, along with the 
rising  interest  there  is  another 

success factor – the BEF has always 
raised  the  important  issues,  not 
necessarily  the  ‘hot  topics’  but 
rather  those  that  should  be  the 
‘hot topics’.

The BEF themes are closely related 
to  important  issues  in  the  EU 
economy and the need for public 
discussion, as a brief look back at 
earlier conferences shows.

In  2000  the  Forum  discussed 
growth and employment in EMU, 
asking whether and how it could 
be  maintained.  It  was  here  that 
Philippe Maystad, president of the 
EIB, insisted on the importance of 
medium-term budgetary objectives 
and  the  need  to  accelerate 
budgetary  consolidation  in  good 
times,  contrary  to  what  was  a 
tendency  in  most  Member  States 
at that time.

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Paying attention to medium-term 
objectives was also touched upon 
by  Didier  Reynders,  the  Belgian 
Minister of Finances and Head of 
the Eurogroup in the 2001 Forum. 
Minister  Reynders  explained  his 
project of a Eurogroup acting as a 
‘catalyst’ for structural reforms. 

In 2002 when the stock markets 
were  at  their 
lowest,  the 
conference asked what regulation 
is  needed  to  provide  resilience 
in  the  future,  and  economic 
convergence  also  ﬁ rst  appeared 
in  view  of  the  upcoming  2004 
enlargement.

In  2003,  as  the  emphasis  on 
sustainable  finances  gathered 
momentum,  the  economic 
implications  of  ageing  were 
first  given  high  visibility, 
foreshadowing  the  importance 
given to this issue today in policy-
making.

In 2004, Richard Hemming of the 
IMF spoke on the pros and cons 
of the then unreformed SGP and 
discussed the design of medium-
term  ﬁ scal  targets  in  terms  of 
‘reloading  the  ﬁ scal  cannon  in 
the good times’ – but ﬁ scal rules 
are needed to control politically-
driven expenditure he insisted.

In  2005,  with  ‘globalisation’ 
becoming  an  issue  of  public 
concern,  seen  as  a  threat  to  EU 
jobs  by  some,  the  conference 

heard  from  Prof.  Bhagwati  of 
Columbia  University  on  lessons 
from  outsourcing  and  labour 
migration,  and  Jeremy  Rifkin, 
president  of  the  Washington 
Foundation on Economic Trends, 
explained  his  ‘European  dream’ 
of a Europe serving as the model 
for a new world order based on 
peace,  justice,  democracy  and 
sustainable development.

In 2006, former EU Commissioner 
Mario  Monti  foreshadowed  the 
discussions  in  this  year’s  Forum 
when  he  laid  out  the  risks  to 
growth  posed  by  diverging 
economic  performances  in  the 
Member  States,  and  particularly 
in the euro area.

As  a  prestige  meeting  with 
carefully  balanced  mix  of 
speakers  and  themes  intended 
to  leverage  communication 
channels and spread messages as 
widely as possible, it is clear that 
the Brussels Economic Forum has 
developed  into  a  real  asset  for 
the European Commission. Today 
the  BEF  is  more  open  than  ever 
to  fresh  ideas  coming  from  all 
around the world, and is focused 
on  policy  rather  than  academic 
debate.  As  Jürgen  Kröger,  a 
Director  in  DG  ECFIN  explains, 

Pedro Solbes, Former European 
Commissioner for Economic and Monetary 
Affairs, Valéry Giscard d’Estaing, 
Former President of France

“The  aim  of  the  BEF  is  not  to 
promulgate a philosophy, but to 
show openness to new ideas, and 
to  promote  creative  discussion 
about  policy  matters  that  can 
be  fed  into  the  Commission 
■
strategy.” 

 
 
 
 
 
 
 
 
 
 
3
Springing forward

The  early  gatherings  of  the  BEF  took  place  against 
a  background  of  economic  recession  or  faltering, 
uncertain recovery – not so for the 2007 Forum. 

2005 to a forecast 1.2% this year. But, 
as the Commissioner points out, these 
ﬂ attering averages hide the fact that 
ﬁ ve Member States will still be running 
deﬁ cits of more than 3% in 2007.

The forecast also points to upside and 
downside risks on the external front. 
Stronger  than  expected  growth  in 
the  global  economy  is  a  possibility 
say  the  forecasters,  but  this  must 
be  balanced  against  the  risk  of  a 
more  marked  slowdown  in  the  US 
housing market, new oil-price hikes 
or a disorderly unwinding of global 
imbalances.

DG ECFIN publishes regular economic 
forecasts on behalf of the European 
Commission. If you do not obtain a 
copy  of  the  2007  Spring  Forecasts 
at  the  BEF,  or  if  you  don’t  want  to 
carry it home on the train or plane, 
then you can always download the 
most  recent  forecasts  from  the  DG 
ECFIN website and subscribe to our 
mailing  list  in  order  to  receive  an 
email alert each time a new forecast 
■
is published. 

world economy that seems to have 
been  surprisingly  little  affected  by 
the  slowdown  of  the  US  economy 
so far. 

At  the  press  conference  to  launch 
the latest spring forecasts, DG ECFIN 
Commissioner  for  Economic  and 
Monetary  Affairs,  Joaquín  Almunia, 
while  highlighting  the  positive 
outlook, sounded a note of caution. 
“We must help sustain the economic 
recovery  by  putting  public  ﬁ nances 
ﬁ rmly  on  a  sounder  footing  and  by 
pursuing the reform process. This, in 
turn,  will  cut  public  debts  and  help 
increase the growth potential before 
the  ageing  problem  starts  kicking 
in”.  Public  ﬁ nances  have  turned  out 
better than expected recently mainly 
on  the  back  of  higher  tax  revenues. 
This  has  led  to  a  fall  in  the  average 
budget deﬁ cit from 2.3% of GDP in 

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Among  the  blue-covered 

publications  piled  on  the 
DG ECFIN stand outside the 
BEF  conference  room  you  will  ﬁ nd 
the  latest  ‘spring  forecasts’  from 
the Commission. Given the positive 
conclusions  in  this  issue,  future 
editions  might  better  be  ‘rose-
covered’.  Growth  up,  employment 
up  and  sustainability  up,  is  the 
overall message from the DG ECFIN 
forecasters who no doubt are happily 
dumping the ‘Cassandra-style’ robes 
that  have  been  the  required  dress-
code of the past few years.

According  to  the  forecast,  the  EU 
Economy  should  grow  by  2.9%  in 
2007  and  2.7%  in  2008,  driven  by 
solid investment and stronger private 
consumption.  These  ﬁ gures  are  an 
upward revision from the last forecast 
in November 2006, and the forecasters 
predict almost nine million new jobs for 
2006-2008 – six million for the euro 
area alone – knocking unemployment 
down to 6.7% in 2008 from 8.7% in 
2005. Such unemployment levels have 
not been seen since the early 1990s. 
Improved  public  ﬁ nances,  contained 
inflation  and  general  government 
deﬁ cits  falling  to  levels  not  seen  in 
many years are the other anticipated 
positive  consequences  of  improved 
growth.

This  stronger  outlook  is  partly 
explained  by  better-than-expected 
performance  in  2006  that  saw 
the  strongest  pace  of  expansion 
for  six  years  as  high  corporate 
proﬁ tability  and  optimistic  business 
sentiment  drove  investments  and 
more  jobs  produced  higher  private 
consumption.  Globally,  support 
for  growth  comes  from  a  buoyant 

Euro-area economy: 
from strength to strength

‘Strike while the iron is hot’ is the message from the 
European  Commission  to  the  Eurogroup  Member 
States  as  a  recent  report  from  DG  ECFIN  shows  the 
euro area economy growing well above its long-term 
average and creating 2 million new jobs in 2006.

This  report,  the  Annual  Statement 
on  the  Euro  Area,  appears  once  a 
year and is accompanied by a more 
extensive  ‘Annual  Report  on  the 
Euro Area’, which explores in depth 
the common challenges facing euro 
area members.

Published  on  3  May,  the  latest 
Statement describes the euro area as 
having a strong footing to face the 
challenges that still lie ahead. “Policy 
makers must strike while the iron is 
hot,”  said  Commissioner  Almunia, 
“They  should  put  public  ﬁ nances 
on  a  firmer  footing,  implement 
reforms  that  will  increase  the  euro 

area’s  growth  potential  and  show 
leadership  on  global  issues”.  The 
ﬁ rm intention to use the ‘good times’ 
wisely  was  shown  by  the  recent 
agreement among the Eurogroup to 
build on recent better-than-expected 
budgetary  outcomes  by  pursuing 
more  ambitious  budgetary  targets 
than those set in the SGP.

The  Annual  Statement  and  Report 
on the Euro Area are recent additions 
to the work of DG ECFIN. Copies will 
be available on the DG ECFIN stand 
at the BEF. Both documents can also 
be downloaded from the DG ECFIN 
■
website. 

Session II: Adjustment 
and integration 
dynamics in EMU

The aim of Session II is to look into the factors that lay 
behind  persistent  growth  and  inﬂ ation  divergences 
in  the  euro  area  and  to  discuss  how  adjustment 
challenges in its members can best be addressed, and 
what future members could learn from the experience 
so far. Leading academics in this ﬁ eld will share their 
views  on  the  main  issues  in  adjustment  challenges 
and their resolution, for example:

Competitiveness
Some Member States have suffered 
a sustained loss in competitiveness 
since  EMU  was  launched,  and 
against  a  background  of  large 
current  account  imbalances  in 
countries  such  as  Greece,  Spain 
and Portugal the question arises 
as to how much of a problem this 
is? Do they need to be rebalanced 
to avoid provoking even further 
divergence, and how can this be 
best achieved ?

Flexibility
If the competitive position of some 
Member  State  economies  needs 
improving,  then  the  ﬂ exibility  of 
labour markets must be addressed. 
Which  mix  of  reforms  could  help 
achieve a ‘rebalancing’ that does not 

throw the whole burden of reform 
onto wage setting, through wage-
restraint?  How  far  can  adopting 
new  technologies,  new  ways  of 
working and more training provide 
the  needed  productivity  increases 
to restore competitiveness?

Integration
How  can  we  push  forward 
financial  market  integration? 
Integrated  financial  markets 
are  desirable  because  we  know 
they help smooth local economic 
shocks,  acting  as  a  cushion  for 
all  by  redistributing  risks  across 
the  euro  area.  Yet  progress  in 
integration, although sure, is slow, 
and  the  session  will  share  some 
ideas on why more integration is 
needed.

Also speaking today
Christopher Allsopp 
is a Reader in Economic Policy at Oxford University. He has previously held positions at the OECD, the 
Bank of England and HM Treasury as well as spells on the UK Monetary Policy Committee and the Court 
of Directors of the Bank of England. He has been extensively involved in domestic and international 
policy issues as a consultant and has published widely on monetary, ﬁ scal and exchange rate issues as 
well as the problems of economic reform. In 2004, Christopher Allsopp completed a ‘Review of statistics 
for economic policy making’ for the UK government.

Giuseppe Bertola 
is  a  Professor  of  economics  at  the  University  of  Turin.  His  research  focuses  on  labour  markets  in  an 
international  perspective  and  particularly  on  their  interactions  under  EMU.  He  has  also  published 
widely on issues in macro- and microeconomics, including among other topics his research on exchange 
rates, money market institutions and interactions between growth and distribution. An advisor to the 
Commission and the ECB, Professor Bertola is a Managing Editor of Economic Policy and an Associate 
Editor of the Journal of Economics.

Willem Buiter 
is Professor of European Political Economy at the London School of Economics and Political Science and 
Professor  of  Economics  at  the  University  of  Amsterdam.  From  2000  to  2005  he  was  Chief  Economist 
of the European Bank for Reconstruction and Development. From 1997 to 2000 he served as external 
member of the Monetary Policy Committee of the Bank of England. Before this, he held professorships 
at Cambridge, Yale, LSE, Bristol and Princeton. He chairs the Council of Economic Advisors of the Second 
Chamber of the Dutch Parliament. 

Jean Pisani-Ferry 
is Director of Bruegel, a Brussels-based economic think tank, and professor with Université Paris-Dauphine. 
He is a member of the European Commission’s Group of Economic Policy Analysis and president of the French 
economic association. After holding several positions in France, in 1989, he joined the European Commission 
as economic adviser to the Director-General of DG ECFIN. From 1992 to 1997 he was the director of CEPII, 
the  main  French  research  centre  in  international  economics,  and  an  advisor  to  the  French  government. 
His main research topics include economic policy, European integration, employment, and globalisation.

Philip R. Lane
is Professor of International Macroeconomics and Director of the Institute for International Integration 
Studies at Trinity College, Dublin. He is a research fellow of the Centre for Economic Policy Research 
(CEPR) and has been a visiting scholar at the International Monetary Fund and the Federal Reserve Bank 
of New York, and a consultant to the European Commission. His research interests include international 
macroeconomics, economic growth, European Monetary Union and Irish economic performance. 

F

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Who’s who at the BEF  |  John Lipsky

An experienced optimist

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John  Lipsky  was  appointed  First  Deputy  Managing 
Director of the IMF last year. 

In one sense this appointment was 

a  ‘coming  home’  for  him  as  he 
had  spent  a  decade  in  the  IMF 
back  in  the  1970s  and  80s  where, 
among  other  things,  he  analysed 
developments in international capital 
markets and represented the IMF in 
Chile  (1978-80).  Joining  Salomon 
Brothers  in  1984  he  directed  their 
European  Economic  and  Market 
Analysis Group before taking up the 
Chief Economist position. 

There  followed  a  spell  as  Chase 
Manhattan  Bank’s  Chief  Economist 
and  Director  of  Research  before 
he  moved  to  JPMorgan,  again  as 
Chief  Economist,  where  he  was 
responsible  for  worldwide  policy 
and economic views. His ﬁ nal years 

at  JPMorgan,  before  joining  the 
IMF,  were  as  vice  Chairman  of  the 
JPMorgan Investment Bank where he 
published independent research on 
the  principal  forces  shaping  global 
ﬁ nancial markets. 

As  a  contributor  to  the  opening 
session of this year’s BEF John Lipsky 
will speak in part 1, ‘Dollars, deﬁ cits 
and distress: regional perspectives’. 
Speaking earlier this year on reducing 
the risks from global imbalances he 
analysed  how  the  ‘imbalance’  of 
deﬁ cits  and  surpluses  has  arisen. 
The series of economic crises in the 
1990s were not pretty he said, but 
the situation could have been a lot 
uglier if policy-makers had repeated 
the  mistakes  of  the  1930s  and 

slammed  on  the  brakes.  But  they 
did  not  do  so;  instead  there  was  a 
move to monetary accommodation 
that  produced  results  far  more 
favourable than anyone anticipated 
and  the  policy-boosted  demand 
growth in the US, combined with a 
rapidly  globalising  world  economy, 
was critical to supporting the global 
upturn that kicked off in 2002. 

As for the future, John Lipsky pointed 
out  that  recent  structural  changes 
in  global  markets  mean  that  old 
‘rules-of-thumb’ for current account 
deﬁ cits  –  what’s  good  or  bad,  or 
what’s sustainable or unsustainable 
– are called into question. 

Reporting  on  the  World  Economic 
Forum in Davos 2007, the Financial 
Times  described  John  Lipsky  as  an 
optimist who is changing the tone of 
the IMF’s comments on global trade 

imbalances.  Quoting  him  as  saying 
that, “Far from being an imminent 
danger  to  the  world  economy,  the 
imbalances should be thought of as 
the corollary of remarkable strength 
in the global economy over the past 
ﬁ ve years, and policies were moving 
in the right direction”.

John Lipsky is not a stranger to the 
BEF and has contributed on several 
occasions as a valued speaker and 
expert on world ﬁ nancial markets. 
Indeed  he  participated  in  the  ﬁ rst 
Brussels  Economic  Forum,  held  in 
2000,  while  Chief  Economist  at 
Chase Manhattan. 

In  his  presentation  in  2000  he 
took  the  prescient  view  that  the 
then  perceived  weakness  of  the 
euro  was  overstated  and  did  not 
represent  any  threat  to  euro  area 
■
price stability or economy. 

Last year they said

“The euro area has less single market than some outside, 
and it seems to want even less...” 

said ex-Commissioner Mario Monti as he identiﬁ ed lack of appetite for reform as one cause 
of economic divergence in the euro area.

“Reform is difﬁ cult, the costs are upfront and the losers are vocal”

admitted Angel Gurria, Secretary General of the OECD who pushed for win-win reform 
packages as a solution.

“People need to feel good about changing jobs several times over 
their career – not a fantastic message, but we have too few leaders 
who dare to tell people the truth”

said the former PM of Denmark, Poul Rasmussen, in his presentation on reforms in Denmark.

“The EU no jobs vs US bad jobs view is becoming more nuanced”

claimed Andrew Watt of the European Trade Union Institute while talking about the 
complexity of social models.

Publications from DG ECFIN

DG  ECFIN  publishes  a  wealth  of 
reports,  studies,  and  analyses  on 
EU  economic  matters.  Examples  of 
these publications are available free 
of charge from the DG ECFIN stand 
outside the conference room. They 
can  also  be  downloaded  from  the 
DG ECFIN website. They include:

f ro m  

European  Economy  series: 
containing  major  reports  and 
c o m m u n i c a t i o n s  
t h e 
Commission to the Council and the 
European Parliament on the economic 
situation  and  development.  The 
recent  Spring  Economic  Forecasts 
and the EU Economy Review are part 
of this series.

European  Economy,  Economic 
Papers: This series aims to increase 
awareness  of  the  analytical  work 
done  on  EU  economic  issues  and 
to seek comments and suggestions 
for further analyses from the wider 
community  of  EU  economists. 
Recent  titles  include:  The  political 
economy of public investment and; 
How reliable are the statistics for the 
Stability and Growth Pact?

European  Economy,  Occasional 
Papers:  Written  by  the  staff  of  the 
DG ECFIN and experts working with 
them,  this  series  aims  to  increase 
awareness of the policy related work 

done and covers a wide spectrum of 
subjects. Recent titles include: Growth, 
risks  and  governance,  the  role  of 
the  ﬁ nancial  sector  in  southeastern 
Europe  and;  Country  study:  raising 
Germany’s growth potential.

European  Economy  News:  For  a 
wider public interested in European 
economic  issues  and  the  work  of 
DG  ECFIN  there  is  also  a  quarterly 
magazine. Copies of the latest issue, 
with  invited  contributions  from 
eminent  economists  to  celebrate 
the  50th  anniversary  of  the  EU,  are 
available  from  the  DG  ECFIN  stand 
outside  the  conference  room. 
Subscription is free of charge.

European  Economy  Research 
Letter: Reporting on the results of 
research undertaken or sponsored 
by  DG  ECFIN,  this  electronic 
newsletter aims to raise awareness 
of  DG  ECFIN’s  economic  analysis 
and  research  activities  among  the 
international  economic  research 
and  policy  community.  Appearing 
three  times  a  year,  the  newsletter 
can be downloaded free of charge 
from the DG ECFIN website. Printed 
copies  of  the  latest  issue  and  a 
subscription  form  are  available 
from  the  DG  ECFIN  stand  outside 
the BEF conference room.

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Pascal Lamy: Doha 
for development

Don’t  miss  the  closing  keynote 
address by Pascal Lamy tomorrow.  
Previously Chief of Staff to Jacques 
Delors,  then  Commissioner  for 
Trade under Romano Prodi, Pascal 
Lamy is now Director-General of 
the  World  Trade  Organisation 
and  is  leading  the  negotiations 
for the Doha round which will set 
the  rules  of  international  trade 
for the future. 

Speaking in Washington recently 
he warned that governments may 
soon  be  facing  the  unpleasant 
reality of failure if the situation 
in  trade  negotiations  does  not 
improve. In his keynote address 
on 1 June, Pascal Lamy will speak 
on  ‘Spreading  the  benefits 
of  trade  opening’,  where  the 
key  issues  may  be  expected  to 
include:

 Improving  trade  opportuni-
ties  for  developing  countries  is 
at the heart of the international 
strategy to promote  development 
and  alleviate  poverty.  Lamy  has 
described some  existing trade re-
strictions as “a  travesty of  justice 
and a denial of our commitment 
to meet the Millennium Develop-
ment Goals”.

The  earlier  Uruguay  Round 
began  the  sustained  process  of 
economic integration and falling 
import  prices  that  made  a  vital 
contribution to strong and non-
inﬂ ationary  growth  worldwide. 
Pascal  Lamy  recently  stated, 
“Failure  of  the  Doha  Round 
would  strip  the  global  economy 
of one of its most powerful and 
enduring sources of strength and 
stability”.

The  basis  for  international 
economic cooperation can never 
be  taken  for  granted.  Failure 
to  consolidate  and  strengthen 
the  multilateral  trading  system 
would  weaken  the  ability  of 
member  governments  to  stand 
ﬁ rm against trade protectionism. 
“That  is  a  risk  which  we  cannot 
afford  to  take  lightly”,  warned 
Lamy recently.

Trade  opening  needs  to  be 
accompanied  by  the  right 
domestic  policies  to  ensure  the 
beneﬁ ts  of  a  more  open  trade 
are  fairly  spread  and  to  ensure 
that  adequate  responses  are 
also  given  to  those  negatively 
■
affected.   

Pascal Lamy will close this year’s BEF with his Session IV keynote address 
at 12.30 tomorrow

The Forum 

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