2023-09-29 16:02:07
In this new weekly issue of the program “State of the Union”, journalist Stefan Grobe looks back on economic relations between Europe and China, in particular on their impact in the fight once morest inflation.
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Economic relations between China and the EU were thrust into the spotlight earlier this month following the European Commission launched an investigation into Chinese subsidies to its electric car industry.
By distorting the market for one of the jewels of Europe’s industrial crown, China has crossed a line. This is what Brussels wanted to make Beijing understand.
A serious slowdown in the European auto industry might trigger a domino effect that Europe cannot afford.
_”Let us not forget that the European economy remains sluggish and that the inflation rate remains high._And it is this last point that most concerns the European Central Bank. explains Stefan Grobe.
At a hearing in Brussels this week, ECB President Christine Lagarde made clear that interest rates will remain high until the fight once morest inflation is won.
_”We remain committed to ensuring that inflation returns to our medium-term objective of 2% in due time. Inflation continues to fall but is still expected to remain too high for too long (…) In any case, our future decisions will ensure that the ECB’s key interest rates are set at sufficiently restrictive levels for as long as necessary.”, declared_Christine Lagarde, President of the ECB.
The other side of the coin: as long as interest rates in the Eurozone remain at historically high levels, it will be difficult for the economy to grow.
A situation which is already starting to affect the rest of Europe, as the latest forecasts suggest.
Video editor • Vassilis Glynos
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