Basque Economics Worldwide Leadership

Mario Draghi’s speech at the Rimini Meeting outlined an ambitious vision for Europe, broadly aligned with the priorities of the von der Leyen Commission but marked by deeper warnings. He stressed the need to boost productivity, achieve technological and energy autonomy, and relaunch the Single Market as a platform for global competitiveness, while also accelerating the climate transition and defending democracy against authoritarian threats. At the same time, he delivered three critical messages: that Europe’s fiscal rules are outdated and lack credibility, that the EU’s geopolitical weakness leaves it sidelined in major global conflicts, and that a new political architecture, entailing shared sovereignty and fiscal union, is urgently needed. His message is not Eurosceptic but rather a form of “high-voltage Europeanism”: economically reformist and politically refoundational, challenging the EU to act with unity, speed, and scale in order to rise to its historic promise.

The Fed and the ECB share a symmetric 2% inflation target but interpret it differently. The Fed, with its dual mandate of price stability and maximum employment, is willing to cut rates even with inflation still above target, emphasizing the balance of risks between inflation and growth. The ECB, by contrast, with its hierarchical mandate focused on price stability, remains more rigid and reluctant to lower rates, even though its projections place inflation below 2%. According to the Taylor rule, both institutions are broadly aligned if a low neutral rate is assumed, but communication and institutional context shape opposite perceptions: pragmatism in Washington and caution in Frankfurt, a divergence with global implications for currencies, capital flows, and economic stability.

In recent years, Europe has faced a series of overlapping crises (financial, health, geopolitical, and demographic) that have exposed deep structural weaknesses in its economic model. This opinion piece argues that while lessons have been identified repeatedly, progress has been uneven and often delayed. It outlines seven key takeaways: the renewed role of the state, the psychological dimension of economics, persistent underinvestment despite high savings, stagnant productivity, overreliance on central banks, the limited transformative power of crises, and the urgent need for deeper European integration. Without a deliberate and coordinated effort to adapt, Europe risks drifting into economic and geopolitical irrelevance.

El artículo analiza cómo el envejecimiento poblacional, en interacción con las transformaciones digitales y climáticas, podría generar un déficit estructural de fuerza laboral en la Comunidad Autónoma Vasca hacia 2036. A partir de un análisis retrospectivo de quince años y proyecciones demográficas del INE, se plantean tres escenarios de oferta y demanda laboral, todos con riesgo de desajuste. Ante ello, se proponen tres vías de actuación: atraer talento migrante, prolongar voluntariamente la vida laboral con incentivos, y elevar la productividad mediante automatización y formación continua. La tesis central subraya que ignorar el “invierno demográfico” supondría perder competitividad, y que Euskadi debe actuar ya, aprovechando su red industrial y cooperativa como palancas para un pacto socioeconómico de adaptación.

The article explores how companies are redefining their global strategies in a context shaped by geopolitical crises, logistical disruptions, and the growing rivalry between the United States and China. Efficiency is no longer sufficient; resilience, understood as adaptability, operational diversification, and geopolitical awareness, has become key to competitiveness. Through the case of India and its UPI digital payments system, the piece illustrates how digital infrastructure is reshaping comparative advantages. In this new economic landscape, companies are no longer just managing risks, but navigating complex, ever-evolving systems—requiring more sophisticated and flexible strategic leadership.

Europe enters August with a clearer outlook thanks to the new trade pact with the United States, which caps tariffs at 15%, even though the effective rate rises to 16.1%, in exchange for Brussels pledging multi-billion-dollar purchases of U.S. energy and investment. The growth hit should be moderate, yet the threat of a 30% levy has vanished and regulatory visibility has improved. Industry is still hesitant: the manufacturing PMI has bounced to 49.8 but remains in contraction territory, while some suppliers have pushed up input costs and mild logistical bottlenecks have emerged. Inflation is contained (2% headline, 2.3% core), and the disinflation path could allow the ECB one more 25-bp cut after the summer, provided prices and credit hold steady. Risks linger, renegotiation of the 50% duty on steel and aluminium, possible digital taxes, and diverted Chinese exports, but overall the bloc appears headed for a soft landing, with monetary room to manoeuvre should autumn bring surprises.

The Federal Reserve left its July meeting sharply divided: two governors called for an immediate 25-bp rate cut, while the majority held the federal-funds range at 4.25-4.50%. The split reflects a labor market cooling faster than expected, only 73,000 jobs added in July, downward revisions of 258,000, a three-month average of 35,000, and unemployment steady at 4.2%, yet wages still rising 3.9% and labor costs picking up, though a 1% jump in productivity keeps unit labor costs near 2.2%. With core PCE inflation at 2.8%, the ex-ante real policy rate sits around 1.7%, above the post-war average, prompting some officials to argue for a “preventive” cut before tighter policy and new tariffs plus slower immigration further damp demand. Fed-funds futures now assign roughly a 70% chance to a September cut, but the Fed wants two more jobs and inflation reports before deciding, mindful that a misstep could turn today’s slowdown into an avoidable recession.

The recently announced EU-US tariff agreement temporarily defuses a looming trade conflict but exposes Europe's limited strategic leverage in the evolving global order. While the deal avoids further escalation and secures certain exemptions, it comes at a steep cost: over $1.3 trillion in energy purchases and investments, with minimal legal safeguards or institutional oversight. Compared to the UK's targeted negotiations and China’s firm stance, the EU appears reactive, committing heavily without a binding framework. The agreement buys time, but unless Europe develops a cohesive industrial policy and assertive geopolitical voice, it risks cementing a subordinate role in a world driven more by power dynamics than by multilateral norms.

The piece contrasts classical monetarism, which explains the business cycle almost solely through changes in monetary aggregates, with today’s mainstream macroeconomics, which also factors in money velocity, interest-rate rules, expectations, credit conditions, and the labor market. It concludes that gauging recession risk and inflation dynamics requires integrating all these elements rather than relying on a single indicator.

The Trump administration’s recent decision to bar international students from enrolling at Harvard goes far beyond a courtroom battle—it marks a deep structural risk to the economic engine of the United States. By cutting off access to highly skilled foreign talent, the country is not just closing a door; it’s narrowing its future. This move threatens to reduce America’s capacity to innovate, shrinks the pool of young, qualified workers, and undermines its long-term economic competitiveness.