Renowned Oxford University economist predicts modest growth for European business

Expert economist Andrea Boltho was a first presenter at Afera’s Athens Conference beginning 3 October, delivering in exciting narrative and graphs his riveting, “relatively optimistic” predictions about Europe’s economy, which he said should continue to grow at a moderate pace for a number of years.

“I see clouds, but barring a major European crisis, we should have moderate growth in the range of 1.5% to 1.75% in the eurozone, maybe less in the U.K. because of Brexit,” shared the Oxford Magdalen College fellow emeritus, who has worked for the OECD and consulted for the World Bank.

What is the bigger picture for the tape industry in Europe, as affected by the economy and politics?

Emerging markets are currently weighed down by high debt levels in dollars. The U.S. is thwarted by Trump’s unpredictability, which could spin off into a trade war or financial crisis. So Europe is better positioned for prosperity than other parts of the world. This does come with a few risk factors, including a possible Brexit shock, higher interest rates, Europe’s involvement in a trade war, and, most crucially, heightening, potentially dangerous eurozone tensions.

What is driving eurozone tensions? Since the birth of the euro, there has been a lack of economic convergence between north and south, with the eurozone income differential still 10% below its peak before the Lehman Brothers’ Great Recession. Asymmetrical behaviour divides the north and south: “There is much more inclination towards debt in the south than in the north,” said Mr. Boltho.

There has also been a massive appreciation of the southern exchange rate in terms of the “real exchange rate”. Other factors such as the relative degree of presence of an underground economy and corruption, and the absence of the rule of law, don’t make for a solid monetary union. “But,” Mr. Boltho emphasised, “politics is strongly in favour of keeping the euro in place, both in northern and southern Europe, although Italy is a new player to watch.

“Policies are broadly accommodating growth, there is a modicum of confidence, and unemployment is declining.” All this said, Mr. Boltho used historical evidence to illustrate that European adhesive-tape-related companies should be prepared for an eventual recession.

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