Economy: which ways to get out of the crisis from above?

Pandemic that never ends, high inflation that persists, economic slowdown worsening around the world, risk of a particularly warm social recovery in France, German parliamentary elections in September that could end the “money printing” of the ECB and the Interest rates could push up on Eurozone government bonds sharply… It’s becoming clear that the coming weeks are going to be complicated.

And this, especially because, in the face of these adverse developments, the weapons of economic policy to try to restart the machine are limited, if not non-existent. In fact, only countries with substantial foreign exchange reserves (especially Asian countries) and/or significant fiscal leeway (mainly Germany and the Netherlands) have what it takes to cope with this new crisis. The United States should gradually pull itself out of the game with difficulty, mainly thanks to the dollar’s hegemony and the combativeness of its companies and employees.

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As for the eurozone (excluding Germany and the Netherlands), the bandolier is empty: the refi rate is already at 0%, the government debt is stratospheric, the “money printing press” has already been fully used, but has not produced very few positive effects on the growth, fueling a substantial stock market bubble. Under these circumstances, the end of 2021 and the year 2022 will inevitably be difficult. Faced with this bleak prospect, it can of course be tempting to give up. But beware: if we get discouraged, we certainly lose, because pessimism is by definition self-fulfilling and therefore destructive. From then on, you have to think about barricading yourself, buying a piece of land to grow your vegetables and raise your goats, while bringing a gun to defend everything…

Fortunately, far from this disaster scenario, we can also opt for a second solution: that of a way out of the crisis from above. To do this, all you need to do is roll up your sleeves and find a certain dose of hope, even optimism. Let’s never forget: crises are part of economic life and are always phases of opportunity. In other words, if one day a politician or economist announces that he has the recipe for eliminating crises, you know he is a dangerous liar. In the economy it’s a bit like with the human body or the climate, there are crises and storms, the important thing is to get on top of them.

So let us be clear: if we continue to worry, if countries like France refuse to fundamentally reform their economies, if the eurozone governments fail to join forces, if the partners’ social partners refuse to agree , so that the eurozone and France will be the big losers of the 2020s.

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Indeed, insofar as the culture of fatality, pessimism and looking in the rear-view mirror is dominant in our country, we are at risk. Therefore, in order to avoid both an economic and a psychological depression, we have a duty to control it ourselves without relying too much on the government, which will eventually make us pay by raising taxes again anyway.

In this context, in order to avoid collapse, our companies will have to launch anti-crisis strategies that will allow them to cope with the current situation. We therefore recommend the following four strategic paths:

1. Niche strategies, on products and services about which we have know-how.

2. Communicate this “know-how” by developing communication efforts. In times of crisis, we often hesitate to communicate. This is a serious mistake, because whoever dares to talk about it wisely, even during storms, will succeed in standing out and winning new customers.

3. Make the most of innovation and research and development to always stay one or two steps ahead of the competition. These efforts should focus in particular on IT investments and rationalization of costs. Of course, innovation isn’t just about high-tech. It can and should also apply to all layers of the production and distribution process: customer relations, accounting tools, inventory management, after-sales service, etc.

4. Expand its influence internationally, in Europe, but also in the emerging world which, despite the crisis, will continue to deliver two-thirds of global growth over the next thirty years.

In addition to these strategies, it will also be essential to increasingly focus on “on-line distribution” and distance selling, while promoting unparalleled quality of service and price transparency. In this way, our companies can successfully continue their development as they have been doing for several years and emerge as winners from the crisis.

Employees also need to roll up their sleeves, make themselves indispensable, stick to the company’s project, improve their skills and not hesitate to look elsewhere, especially internationally. Conversely, those who give up, who do not question themselves, who play against their company and rely on the state to save them, will surely lose.

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So let’s hope that more and more French and continental Europeans, both businesses and households, will be able to rediscover a vision of the future and face tomorrow’s challenges with hope, because, let’s not forget, optimism always pays off… A fortiori when the world has to go through the Reset box.

Marc Touati, economist, president of ACDEFIA

His new book RESET – What New World for Tomorrow? tops the best-selling budget essays since its release on September 2, 2020

Marc Touatic

Find all his videos on his Youtube Channel† The last of these, Equity markets boosted by the coronavirus

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