In a nutshell: “few, well, till the end”, or in Spanish if I may, “poco, bién, hasta el final”. There are of course non-economic areas: to name a few, defence and border protection; climate change; or youth education and training – an Erasmus Pro programme should be a priority for the unskilled and unemployed youth, which is our common tragedy in France, Spain and Italy. But in the economic field, much remains to be done as well. Although we have succeeded with monetary union, we must make progress towards economic union – so that monetary policy does not remain the only game in town. Page 5 sur 8 1. The first economic priority is to address the root causes of Europe’s continuing subdued growth; and a major one is what I call the “investment crunch”. (Slide 4) Many, following Ben Bernanke’s speech of March 2005, have rightly talked about the “global saving glut” that was putting pressure on the world’s economies. At present, saving remains high, due to the combination of emerging market economies’ surplus and advanced countries’ aging populations. However, (slide 5) what has dramatically changed since the 200708 crisis is investment, which has dropped sharply as a share of GDP in advanced economies. In the euro area, the total investment to GDP ratio has dropped by around 3 points since the 2007 peak and has only slightly recovered since.
While pursuing our primary objectives of safety and soundness and policyholder protection, we also have regard to a number of important considerations, including the competitiveness of the sector and the contribution it can make to long-term economic growth. We are also mindful that as part of its review of the Future Regulatory Framework, the Government has proposed to give the PRA a new secondary objective to promote long-term economic growth and international competitiveness, alongside our existing secondary competition objective. With all of those factors in mind, we think we can deal with the risks we are worried about while also supporting the government’s wider objectives. Specifically, some in the insurance industry have the impression that we are opposed to any release of capital requirements for insurers. I want to be very clear that that is not the PRA’s position – indeed, following a lot of work and examination of the evidence over the last year or so we think that a substantial capital release should be possible while continuing to protect policyholders adequately.