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An Ifop poll for the weekly Le Journal de Dimanche showed Hollande's popularity fell by one point from a month earlier to 41 percent in November.
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The Summit on the Global Agenda is the world’s largest brainstorming meeting attened by thought leaders of the World Economic Forum’s Network of Global Agenda Councils.The Councils, comprised of experts from academia, business, civil society and government, address over 80 pressing issues facing the world today. The Summit on the Global Agenda 2012 is held in Dubai from November 12 to 14 in Dubai.Ahead of the summit, AvinashPersaud, Chairman of Intelligence Capital Limited and Fellow, London Business School, spoke to Gulf News on the wide-ranging impact of the financial crisis in Europe. Gulf News: Is Europe in long-term decline as a financial centre?
AvinashPersaud: The health of financial centres can be detached from their economic residency. It is nearly 150 years since the British economy was the largest in the world, fed by an expansive Empire.Yet today, London is still the largest international financial centre and ranked as the number one centre in most surveys of international business. New York will survive as an international financial centre long after the relative decline of the US economy. The major financial centres of Europe will survive relative economic decline in Europe.Indeed, the major financial centres of continental Europe tend to be in countries with relatively small economies, such as Switzerland, Luxembourg, Ireland and the Channel Islands of Jersey and Guernsey.This underscores that what makes an international financial centre is not so much a strong underlying economy, but good access to markets and infrastructure, an abundance of qualified, experienced people, inexpensive and trustworthy legal systems and effective and appropriate regulation.
The success of the financial centres in the Gulf – like Dubai, Bahrain, Abu Dhabi and Qatar – will depend more on these factors than, say, the price of oil. Therefore, there is still reason for financial centres in the Middle East to add to their strength by developing closer links with European centres, such as joint arbitration centres, and common rules for asset management products that could then be sold in both European and Middle-East centres.Finally, just as a financial centre may be detached from the underlying economy, relative economic decline in Europe does not mean that there are not highly successful companies and extremely wealthy individuals resident there today and in the future. I would not write off Europe as a market, as a source of leading products and people just yet.
Do Europe’s political leaders have what it takes to put the right governance structures in place for financial sustainability?The arrival in 1999 of a new, single currency for the world’s major economic blocs was a historic achievement. A dozen years later, we are discovering that it is still a work in progress. Developing the governance and institutional structures around the euro are is easy in democracies at the best of times, and especially in economic recession when the electorate becomes more inward looking.By and large, European politicians know what needs to be done, but they will say that they do not have the political mandate from their electorate to get it done. This is why, rather strangely from a political point of view, the initiatives are being led by the politically independent, such as the European Central Bank (ECB).The move by the ECB to effectively be a lender of last resort to European banks and governments – the kind of role central banks ordinarily play in sovereign countries – has made me more optimistic that there is, finally, an end of the road of the credit crisis in Europe.It is important to remember that continental Europe’s fiscal position remains far superior to that in the United Kingdom or the United States. Spain’s budget deficit will be close to 5 per cent, half of the US deficit. The severity of the crisis in Europe – with the exception of Greece – had more to do with regional monetary arrangements that are beginning to be sorted out.
What is the most important thing Europe needs to do rejuvenate its banking sector?When the economic boom is done and the party is over, banks are filled with remorse and are reluctant lenders the world over. If you add to that general observation that a large part of their lending to their “own” government had deteriorated in credit quality, you can see why European banks are highly risk averse.Banks will resume lending once confidence in the credit quality of euro-denominated government bonds returns. The effective underwriting of European government debt by the ECB – a backstop – and the European Union’s capital injections into the banks will bring back this confidence. I do not think there is anything that needs to be done at the institutional level to rejuvenate European banking. Once the backstops are in place, time will heal.That said, European politicians are marching ahead with the idea of a European banking union where there is one regulator and one common bank rescue plan and reserve. I think this is a dangerous distraction.One of the key lessons of the crisis is not that there was insufficient commonality in banking, but insufficient diversity. When Ireland and Spain were experiencing housing booms ten years ago, we would have wanted their regulators to have applied stricter capital adequacy requirements than those in France and Germany, where there was not a boom in lending to the housing industry.I fear a banking union will make such diversity more difficult in the future and so we could end up with greater concentrations of decision-making and lending rather than introducing the greater diversity that is at the heart of all risk management.
