Emmanuel Macron recently delivered his second ‘Sorbonne’ speech, where he outlined his vision for Europe in a more somber tone, despite periodically acknowledging that he had spoken for too long. This speech brought back memories of a talk given by Jack Lang years ago in honor of Irish President Michael D Higgins, which highlighted the importance of culture in politics. Lang received a warm reception from the public, demonstrating the power of cultural connections in winning votes.
While Macron is one of the few European leaders capable of articulating a vision for Europe, some elements of his speech, such as the goal to make Europe a world leader in spacetech and AI by 2030, may not be feasible. The real challenge lies in financing these ambitious plans, especially since Europe lacks the financial resources of the US and China. The capital markets union was established in 2014 to address this issue but has not made significant progress in harmonizing finance regulations and promoting capital flow in the Eurozone.
Despite calls for greater financial dynamism in Europe, leaders have been hesitant to accelerate the capital markets union due to concerns about imposing costs on local asset managers. This reluctance to act is disappointing, especially considering the urgent tone of Macron’s speech and the growing economic disparity between Europe and the US. Some suggest that loosening investment regulations and attracting private capital from outside Europe may be the most viable solution for funding technology infrastructure in the future.
There is a growing recognition that European governments must adapt to the changing financial landscape by allowing pension funds to invest more in private equity. This shift in funding strategy could lead to a reevaluation of governance structures, with pension funds becoming more active and public representation increasing on corporate boards. Such changes may prove more effective than the traditional approach of relying on government bonds to address debt issues in European countries.
In conclusion, Macron’s recent speech highlights the need for Europe to prioritize financial innovation and collaboration to remain competitive on the global stage. As the US economy continues to outpace Europe, leaders must be willing to explore new funding models, such as attracting private capital and empowering pension funds to invest in growth areas. This shift towards a more dynamic financial ecosystem could pave the way for greater economic growth and innovation in Europe in the years to come.
