The United States and China have chosen to strengthen their industrial policy in order to continue to innovate and stay on course for technological dynamics that generate productivity and additional income.
By strengthening their domestic demand, these two economies will have a stable base in the face of a more uncertain international environment. Industrial policy must help modulate the direction of the economy to gain autonomy because the world is no longer as cooperative as it was during the rise of globalization.
Strengthening internal dynamics should reduce the risks of excessive sensitivity to shocks from the rest of the world while reducing the volatility of productivity gains and associated jobs and income.

In Europe, on February 26, the main axes of the industrial strategy will be presented. This is an important step that will have to reflect the European response to the American and Chinese challenges. In a less cooperative world, we must be able to define ourselves through an autonomous strategy.

Stéphane Séjourné, the new European Commissioner, gave an interview to Politico, outlining the main points of what could be the European strategy for industry.
There are 3 main axes

• Be active in maintaining existing industrial companies. This involves specific aid
• Define a strategy to reduce energy costs which are much too high in Europe compared to the US. This is a competitiveness challenge.
• Give an active role to public markets, particularly to accelerate low-carbon strategies.

Such a framework would make sense if the industrial sector were in a normal cycle. This is not the case. It is in acute crisis in Germany. The Draghi report talks about massive investments, disruptions and milestones to innovate and generate productivity gains.
In the interview, despite the inflections, we are more in continuity than in rupture. This does not seem to be up to the challenge of getting the European industry out of its torpor.

But the final blow is probably towards the end of the interview when it comes to a quick agreement with the USA to avoid a trade war. Christine Lagarde shared this point a few weeks ago.
This is a way of acknowledging Europe’s inability to cope without the US. Europe thus agrees not to get involved in global discussions and to accept American positions. This may be a principle of reality, but it may be satisfactory.
By tying its hands in this way, Europe will probably have to accept that the objectives it defines as major could become secondary in order to comply with American wishes. We are thinking here of the climate and the death of net zero that I mentioned yesterday.

Source POLITICO Europe Stéphane Séjourné Link https://politi.co/3C3duaj