Renewed Franco-German alliance ‘key’ to EU economic future

Europe’s political and economic future is dependent on the key Franco-German alliance being re-established after important national elections on the continent this year, the vice-chairman of the world’s largest asset manager said in Dublin in Tuesday.

Europe, which has been struggling with low growth for years, has potential for "upside surprises", said Philipp Hildebrand, vice-chairman of BlackRock, provided the continent can "steer through" a year of "very consequential elections" in the Netherlands, France and Germany this year.

But for Europe to have a real future as a key global force, the pivotal relationship between Germany and France, which “unfortunately has come to be questioned in the past five years”, needs to be re-established, Mr Hildebrand told a European financial forum in Dublin.

“You have to have a strong foundation relationship between Germany and France to make the European project work,” said Mr Hildebrand.

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He said Europe should be a “shining example” globally, amid the current global phenomenon of anti-establishment sentiment, for having an economic model based on “dignity, education and redistribution” of income. However, it has been “entirely incapable” of pushing this, as it has been preoccupied in recent years by crisis after crisis, he said.

‘Anger politics’

A world, post-

Brexit

and the US presidential election, dominated by “anger politics” and the “politics of the white working class” is all “linked to the same problem that has more to do with technology than globalisation”, said Hildebrand.

As three of the EU's founder members face national elections this year, opinion polls indicate the far-right Party for Freedom is leading ahead of the Dutch vote in March, while fellow anti-immigration campaigner Marine Le Pen appears set to be in a run-off vote in May to become the next French president. Populist party Alternative for Germany is aiming to enter national parliament for the first time after elections later this year.

The European Commission currently forecasts that the euro-zone economy will expand by 1.5 per cent this year, with all members of the currency region growing for the first time since the onset of the financial crisis. However, deputy director-general in the commission's unit for financial stability, financial services and capital markets union, Irishman John Berrigan, told the conference that Brexit poses a risk for the EU and UK economies, with Ireland one of the most exposed.

Meanwhile, US investment group KKR's global head of public affairs, Ken Mehlman, said that the so-called fourth industrial revolution, fusing the digital and physical worlds and encompassing the internet of things and cloud computing, was fuelling populism.

“What truly, in my opinion, is surprising about Brexit and the [US president Donald] Trump election is not that they occurred, but that they took so long to occur,” said Mehlman. He said that the latest wave of innovation and industrial change was “good for humanity, but there are a whole lot of people that they’re not good for”.