The Eurozone faces a period of low prices, languishing real (inflation-adjusted) wages, suppressed consumption, and barely growing fixed investment in the years to come. Forecasts put Eurozone GDP growth at about 1 percent in 2014, and manufacturing output is set to expand close to 2 percent. The region suffers from an overreliance on external demand for generating income. The private sector is income-constrained and will struggle to provide a boost. Banks are shoring up balance sheets following failures of some large and small institutions. As a result, the current efforts led by the European Central Bank to improve capital adequacy are crowding out private sector lending. The Eurozone is stuck with an export growth strategy that combined with weak domestic demand means GDP projections probably overstate both the length and strength of recovery.
The Comprehensive Economic and Trade Agreement is the most extensive trade deal ever signed by Canada, and could be a template for the TTIP between the EU and the United States. The agreement will abolish most tariffs on merchandise trade between the largest consumer market in the world and tiny Canada, but it will also have far-reaching implications for investment, service trade, labor markets and regulations on both sides of the Atlantic.
Global Economy, Competitiveness, Foreign Trade, Imports & Exports
When completed, the Transatlantic Trade and Investment Partnership will lift trade between the U.S. and the EU beyond an already elevated level. Could this heightened trade and investment intensity offer a natural hedge to cyclical variation for American (and European) multinationals? In other words, when business sours in the U.S., can American industrial multinationals look to Europe for more receptive markets for exports and/or production? One way to search for a hedge is through countercyclical business conditions on both sides of the Atlantic. Possibilities can be filtered into two broad categories.
If imitation is the sincerest form of flattery, the UK is positively infatuated with the United States. Two years ago, the UK essentially copied U.S. anti-corruption laws by adopting the UK Bribery Act—a British version of the Foreign Corrupt Practices Act—to criminalize corporate corruption. The UK has seemingly dusted off its copiers again in the form of newly adopted legislation creating deferred prosecution agreements and allowing their use starting in early 2014. This is good news for global companies operating in the UK because it provides a legal “middle ground” for companies to cure a recognized financial misstep, including bribery, fraud, or money laundering.