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Now that the leadership of the Northern hemisphere electoral cycle has been determined, we can expect a slow and steady return to business confidence.
European leaders are now going to make fresh efforts to revive the region’s economy after the victory of nationalist, left wing and populist heads of state that do not share the “save the banks” priorities.
The anxious crowds in the streets of America, Europe and Latin America will now be looking for real leadership. An honest account of the flight from government spending and the need for higher productivity will become the new global agenda.
France, Greece, Italy, Spain, Portugal and Egyptian leaders will have common cause to clean up their political institutions as national governments search for a Euro zone commitment to growth rather than the shorter-term focus on austerity.
After talking to other European leaders, including European Council President Herman Van Rompuy and UK Prime Minister David Cameron, Italian Prime Minister Mario Monti said, “The results of the elections a reflection on European policies”.
“Responsible public finances remain a necessary condition but certainly not sufficient for the key objective: sustainable growth which creates jobs and is oriented towards social equity,” Monti said.
The economics Commissioner Olli Rehn has talked of using some EU budget funds to guarantee small business loans and signalled he will be flexible in applying budget rules.
European Commission President José Manuel Barroso says he shares a “common objective” – finding new ways to boost regional-wide investment projects that can inject fresh momentum into the economy, even as governments continue containing deficits and reducing their debt burdens.
“We clearly have a common objective in reviving the European economy to generate lasting growth which rests on solid basis and is a source of new jobs. We now need to transform these aspirations into concrete action,” he said in a statement late Sunday.
At the ministerial meetings to be held this week, the cautionary note comes from the German delegation that opposes more stimulus and bailouts that are not accompanied by measures to cut false expectations and boost trade.
On Monday Germany called on newly elected leaders to stick to the austerity and reform policies because they are the best path to overcome their debt problem. “The agreements must be respected, this is the best way forward,” Angela Merkel’s spokesman told reporters at a news conference. “Our view is that the jointly agreed positions are the right ones.”
German Foreign Minister Guido Westerwelle said however, that his government was ready to work on a growth pact. “We will move towards each other, there is no doubt about it. It’s not about spending more money in Europe, it’s about spending the money in a better way.”
This all suggests that Australian leading companies need to focus on market entry into the European economies and consolidate relations with the emerging markets rather than wait until it’s too late to grab a share of their recovery.
Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Colin is also a member of the global Association of Professional Futurists.