Social protection: France’s champion of Europe

France spends a third of its GDP on social protection or 34.1%. Health and old age account for 80% of the benefits paid, 91% paid by public authorities and 9% by the private sector. DREES takes stock of it and compares it to that of our European neighbors.

The Directorate for Research, Studies, Evaluation and Statistics (DREES) has just scrutinized the social protection accounts, which have given rise to an interesting international comparison, putting it back in its European context (1). At the same time, on the eve of the French Mutuality Congress in Montpellier, this report led to a comment by the President of the Republic on this “crazy cash” that the Hexagon is devoting to its social aid. Beyond any partisan spirit on the subject, the panorama presented by the DREES makes it possible to return to some figures that are important.

One-third of the national wealth

In 2016, the last year selected for the analysis, our country spent 759.1 billion euros on social spending, a third of our national wealth. Of this amount, 714.5 billion gave rise to benefits, the rest being composed of management fees, financial expenses and capital account uses. In the same year, social protection receipts amounted to 758.7 billion euros or 34% of GDP. On this set of expenditure, the two main risks, old-age survival (325.3 billion euros) and health (249.9 billion euros in 2016), represent respectively 46% and 35% of the total of this expenditure, ie 26% of GDP. 648.8 billion euros, ie 91% of the benefits are paid by the general government (including 515.9 billion by the Secu), the private sector providing 9% of its services, or 41.5 billion euros financial and non-financial corporations (of which $ 28.2 billion by mutual and provident societies) and $ 24.2 billion through non-profit institutions serving households (persons with disabilities, social assistance childhood, people experiencing exclusion). Of the resources of this social protection (758.7 billion), the main part comes from contributions (461.3 billion), to which are added the taxes and duties affected (184 billion), the public contributions (93.7 billion ) and various resources ($ 19.6 billion). Finally, the balance of accounts is gradually becoming the rule: from -11.6% in 2012, the balance of social protection accounts returned to -0.4% in 2016, proof that the situation has improved with the resumption of employment.

France in the lead

In terms of Europe, France ranks first in terms of social benefits in GDP, ahead of Denmark (31.1%), Finland (31.1%) and Belgium (29.1%). %), far ahead of Germany (27.9%) and far ahead of Romania (14.3%) which is at the bottom of the scale. The EU average of 15 is 28.3%. “Paying pensions alone accounts for 12.5% of GDP in the EU-28,” notes the DREES report. They make up the largest share of total benefits (46%). For its part, the risk of illness and health care is the second largest expense item. It represents on average 8.2% of GDP and 30% of total EU benefits to 28. Health is thus a major item in the social protection accounts: “in the EU15, in 2015, the risk of illness and health care contributes 37% to the total growth of social benefits, compared to 22% in 2010, “underlines in this register the direction of studies. The health-care risk is thus the second largest item of social protection expenditure in the European Union, with 8.2% of the GDP of the states concerned, compared with 9.1% for France.

Various evolution of the dependent remains

The report also underlines the low share of household expenses in health expenditure: with an average of 6.8% in the EU in 2015, they are lower than in Luxembourg (10.6%), (12.3%) or in Germany (12.5%) and much lower than Spain (24.2%), Portugal (27.7%) or Greece (35.5%). The global economic and stock market crisis of 2008 marked a turning point on this issue. “The reduction of the public effort after 2008 has resulted in greater financial participation by insured persons in the cost of health goods and services, an increase in user fees or other forms of participation (franchises), or even through a reduction in the coverage rate of the population, “says Drees. Paradoxically, countries where the share of direct financing of health expenditure by households was already among the lowest, such as Germany and France, experienced the largest declines in the rest between 2009 and 2015.

Loan companies in Europe, America and Asia discuss social credit and microcredit in Seville

Loan and social credit institutions from Europe, America and Asia debate since Wednesday in Seville on the situation of pledge and social credit and microcredits through conferences, lectures and roundtables at the XXX General Assembly of the Association International of pledge and social credit entities (Pignus), which is held at the headquarters of the Cajasol Foundation in Seville.

Loan and social credit institutions from Europe, America and Asia debate since Wednesday in Seville on the situation of pledge and social credit and microcredits through conferences, lectures and roundtables at the XXX General Assembly of the Association International of pledge and social credit entities (Pignus), which is held at the headquarters of the Cajasol Foundation in Seville.

As indicated Cajasol in a note, this Wednesday at the headquarters of the Cajasol Foundation in Seville has been inaugurated the XXX General Assembly of the International Association of pledge and social credit entities (Pignus) by the president of the International Association and president of Cajasol Foundation, Antonio Pulido, and Máximo Díaz-Cano, Secretary General of the Presidency of the Junta de Andalucía, who have premiered the Congress that will gather during the next days the main institutions that are part of the world association.

Díaz-Cano has highlighted in his speech that “figures such as credit and social loans are necessary to correct the financial exclusion of the most vulnerable groups to the real effects of the crisis” since “finances are necessary for the development and for economic growth, hence the importance of Microfinance for the fight against poverty, self-sustainable mechanisms that go beyond being assistance actions, “said the Secretary-General of the Presidency of the Junta de Andalucía.

Antonio Pulido, president of Pignus, at the inauguration, clarified “the commitment to strengthen and renew the structures of the International Association, the relations between its partners, the discovery of new realities and, ultimately, to update the discourse so that the activity they represent our entity, old and unique as few, still has a relevant role in economic and social terms, as well as relations with multilateral organizations between the Inter-American Development Bank (IDB), the Andean Development Community and the European Investment Bank (EIB) ) “.

The working groups will discuss and expose, among others, the lectures and roundtables, ‘Pledge credit and microcredit in Spain after the economic crisis’, ‘The pledge activity in Spain’ by Inés García-Pintos de CECA. ‘MicroBank, a social, ethical and ecological bank’, the conference was given by José Francisco de Conrado of MicroBank La Caixa that will give way to the director of the Social Work of Ibercaja, Teresa Fernández Fortún that will explain ‘The new relationship between Social Work and Forestry of Piety ‘.

On the other hand, the Monte de Piedad Caja Madrid will open the debate on the contents of the first working session of the XXX Assembly by José Guirao of the Caja Madrid Foundation.

One of the novelties of this XXX International Encounter of Pignus presents Indonesia’s pledge credit institutions Perum Pegadaian, FederCrédito of El Salvador and the Andean Development Corporation (CAF) that will reveal the lines of work and development of the Indonesian and European entity in the current context.

Also, the panels ‘Prendario credit in Latin America I and II’ will be opened, in which they participate among others, Alejandro Iturra del Monte of Chile, Óscar Vivanco of Caja Metropolitana de Lima (Peru), Carlos Leiza of Banco Ciudad (Argentina) and Roberto Machuca from BIESS of Ecuador.

Also in the meeting will be exhibitions of new opportunities and jobs as the presentation of the ‘I International Course of Introduction to Pledge Credit’, created by Adolfo Meléndez Ielat-University of Alcalá that will announce the digital tool that is launched in this Congress for use and employment of social entities.

Also, this Thursday Maria Lahore, principal executive of the CAF Office in Europe, will unfold the present scenario under the conference ‘A historical descent in the interest of pledge loans’, as well as the Mexican evolution by Javier de la Calle del Nacional Monte de Piedad de México, the presentation report of the Salvadorans of FederCrédito and the planning of the work of the Dorotheum GmbH of Austria.

The closure will be borne by Antonio Pulido, president of the Association who will announce the final declaration of this XXX Pignus General Assembly with its reading and approval and where the next meeting will be announced for March 2014.

Spain will be the locomotive of growth in Europe

Spain has emerged from one of the biggest economic crises that are remembered. In 2008, the prick of the housing bubble and the slipstream of the international financial crisis caused a tremendous crack in our economy that took hundreds of thousands of jobs ahead. Its effects continue to be noticed today in thousands of homes. However, the good news is that the economic recovery is already underway and Spain will be the locomotive of growth in this new era.

Why will Spain be the locomotive of growth?

The Spanish Gross Domestic Product (GDP), which represents the total production of goods and services of our economy, sank precipitously during the years of crisis. However, today it has returned to positive values. In addition, the economic forecasts that the different agencies publish about our country point in only one direction: the economic growth will continue during the next years and, although it will go less, Spain will be the locomotive of growth of Europe.

The International Monetary Fund (IMF) has been the last agency to make public its growth forecasts. In these notes that the Spanish GDP will grow by 2.6% in 2017 and a little less the following year, 2.1%, with ours being the advanced economy that will advance the most in these two years. The problem, however, will continue to be the high unemployment rate, which will end at 17.7% this year and 16.6% in 2018.

The Bank of Spain also recently published its economic forecasts for Spain. In his report estimates that GDP will grow by 2.7% in 2017, 2.3% in 2018 and 2.1% in 2019. In turn, the unemployment rate will be 16.7% this year, 15.4% in 2018 and 13.9% in 2019. As we can see, these are slightly more optimistic forecasts than those of the IMF.

A little before the IMF and the Bank of Spain, the Spanish Confederation of Business Organizations (CEOE) published its Quarterly Report on the Spanish economy, in which it indicated that Spain would grow 2.5% this year and 2.3% in 2018. Meanwhile, the unemployment rate will fall to 17.5% in 2017 and to 15.8% on average in 2018.

Important is also the forecasts of the prestigious Organization for Economic Cooperation and Development (OECD), which coincide with the CEOE in that the GDP growth rate will be 2.5% in 2017 and 2.2% per year next, a tenth worse. Unemployment will be reduced to 17.5% this year and up to 16.1% next year.

BBVA also recently published its economic estimates in its Situation Spain report. These are the most optimistic among those published to date. He points out that we will grow 3% in 2017 and 2.7% in 2018. Meanwhile, the unemployment rate will continue to fall and will stand at 15.6% by the end of 2018.

How long will Spain continue to grow?

In general, very similar forecasts and they all go in the same direction: economic growth will continue over the next few years but will go down. Let’s not forget that in 2016 we grew at a rate of 3.2%. Although we are the locomotive of growth in Europe, our political leaders can not relax and must continue with the path of reforms that allow our economy to continue growing and reducing its huge unemployment rate.

Europe: no preferential treatment on a French deficit

Emmanuel Macron’s emergency measures will lead to a breach of the European rule of 3% deficit.

France and Italy, same price? Two days after the announcement of Emmanuel Macron in response to the crisis of yellow vests, the European Commissioner for Economic Affairs Pierre Moscovici said that France would not benefit from preferential treatment in case of slippage of its deficit. “There is no double standard, the rules are the same for everyone,” said Pierre Moscovici on the sidelines of a conference organized by the Financial Times in Frankfurt.

“It is out of the question to have a privileged treatment for some and overly harsh for others, even if [the rules] are quite subtle and complex, I agree,” continued Pierre Moscovici, while Italy, in the thick of the budget with Brussels, fears unequal treatment. “I refuse to imagine that we pretend nothing in front of the requests ‘billionaires’ coming from a Macron in obvious difficulty and that we take the pockets of the Italians”, indeed warned this Wednesday the vice – Italian Prime Minister Matteo Salvini.

3.4% deficit

Tuesday, the Minister of Public Accounts Gérald Darmanin has quantified the Senate to 10 billion euros the cost of emergency measures and recognized that the budget deficit will reach 3.4% next year if saving measures are not taken. However, the European rule limits the public deficit of a country to 3% of its GDP. Barely a year after leaving the procedure for the excessive deficit, France would be close to the limit of 3.5% which would force the automatic reopening of a new procedure.

Pierre Moscovici reiterated that the rules of the European Stability Pact in some cases allowed budget slippages. A “temporary, limited and exceptional” deviation from the 3% limit is “conceivable”, the EU commissioner reaffirmed, as long as this excess does not last two consecutive years and does not exceed 3.5% over one year. “The European Commission understands that in the face of social movements and very strong demands to reduce the territorial or social divide, a government may have to take action,” he conceded.

130% debt

Italy’s budget proposal for 2019, which nevertheless provides for a deficit of 2.4%, was rejected by Brussels because of the weight of the public debt. The sources consulted by AFP recall that France does not have the same debt as Italy: a little less than 100% against more than 130%.

Italy, heading to the right

  • Italy refuses to change its budget
  • In Rome, the bells will soon ring the tocsin
  • VIDEO. The incident between Moscovici and an Italian MP

A new “working meeting” is scheduled for Wednesday between the head of the Italian government, Giuseppe Conte, and the President of the European Commission, Jean-Claude Juncker. As for the French budget, the European Commission gives itself until the spring to analyze it, said Tuesday the spokesperson of the European executive. “The final budget” of France “will be analyzed in the spring when we publish our economic forecasts,” said Margaritis Schinas at a press point in Strasbourg.

Europe’s future: Open Innovation, Open Science, Open to the World

The Tour d’Europe meeting in the EU presidency country, Bulgaria, was organised by an independent Think Tank in Sofia.

The meeting took place on 29 January 2018 at Structure Gallery and gathered a broad range of actors from policy advisers and former Bulgarian ministers, scientists in the recognized Academies of Science and top universities, as well as innovative start-ups and young entrepreneurs active in the new digital economy. The RISE high-level expert group and authors of the RISE book were represented by Daria Tataj, Luc Soete, Mary Ritter, Julio Celis, Dainius Pavalkis, Ivo Slaus, and Marzenna Wareza.

Key messages:

  • Openness has boundary conditions.

Openness has both a digital and a physical context. The ‘scientific capital’ in Europe should be open and accessible for digital start-ups across Europe. However, when openness builds on an asymmetric context, it can aggravate brain-drain and decline of R&I systems. Therefore, openness must be balanced by a local agenda, including links to cultural diversity and absorptive capacity. It is not about global or local; it is about a smart combination of both.

  • Reconcile history and future.

Many R&I systems in Eastern Europe have undergone dramatic transformations. Comparative strengths shape future opportunities in accumulated R&I. In the early days of the digital revolution, Bulgaria was the Silicon Valley of Eastern Europe. The science system in Bulgaria still retains a scientific specialization in physics, mechatronics, advanced computing, and artificial intelligence. This R&I profile opens up for synergies with the growing digital service economy, where the young generation in Bulgaria – and in other Eastern European countries – is increasingly successful and competitive. However, a reconciliation of past and future strengths requires trust-building and new forms of collaboration between the established scientific community and the new and young digital platform economy.

  • Diffuse knowledge and technologies.

First, create the regulatory and financial framework conditions for universities opening up for closer science-business collaboration; this also implies actions at EU level to modify State Aid rules. Second, understand the motivations of researchers and create incentives. European funding can combine different incentives: curiosity-, challenge- and entrepreneurial incentives. Third, reinforce cooperation networks across Europe; common European missions, where different countries and regions can bring their value added, could help in framing this diffusion, training, and networking.

  • Build trust to bridge science and society.

Citizens must be involved in the R&I process as lead-users, co-creators, and crowd-funders. However, citizens’ involvement also entails a danger of capturing the policy agenda. Researchers should explain and society should have a strong voice in priority setting. We should mobilize a combination of existing communication channels: social innovation communities in cities and local communities, universities as platforms for evidence-based public discussion, direct discussions with experts from different sectors – and from abroad -, and organized use of social media. The smart specialization strategy was an excellent example of striking a balance between top-down direction setting and bottom-up openness to people, businesses and municipalities.

  • Simplify programmes and project management.

Focus European funding on results, not on the process. Abolish the reporting obligation for time-sheets and focus the monitoring on the achievements of the project and its contribution to overall programme objectives. A more simple administration may also speed up the grant award process, which would make the programme more attractive for start-ups and innovative firms, for whom speed is crucial.

Gold: Italian Enria is to oversee Europe’s banks

Earlier this month, the results of the third EU-wide bank stress test were published. In the past week, the public learned that the Italian Andrea Enria is to become the new head of the ECB Banking Supervision from 2019. The latter is not exactly confident.

Italy: Desolate debt situation

Last Wednesday, the Governing Council of the ECB nominated the current Chief of the European Banking Authority (EBA) to replace its former boss Danièle Nouy. The election also included Sharon Donnery, Vice President of the Irish Central Bank. Now, this person has yet to be approved by the European Parliament and the EU leaders. This leaves the future chief overseer from the country, which acts anything but “model boy” in terms of bank stability and fiscal policy.

Just a reminder:

In the coming year, the new Italian government wants to raise new debt from the originally agreed 0.8 percent to 2.4 percent of the gross national product in order to finance the benefits promised in the election to the population. Because of Europe’s particularly high debt mountain of more than 130 percent of economic output, the new debt policy of the Italians is strongly criticized by the rest of Europe.

The Italian banks are also considered ailing, which can be seen from the relatively high proportion of bad loans. This amounts to 10.8 percent. Even more miserable are the banks in Greece (45.3 percent), Cyprus (38.9 percent) and Portugal (13.6 percent).

By comparison, the balance sheets of the banks in Great Britain (1.5 percent), Germany (1.7 percent) and the Netherlands (2.2 percent) look a lot healthier. Since Italy’s economy represents the third strongest economy within the Eurozone, everyone should realize that a financial collapse of Italy for the various European bailout funds should be a few numbers too big.

If the worst-case scenario does indeed materialize, many Europeans will most likely remember a currency alternative forgot in recent years: gold.

WGC reports global ETF gold inflows

Initial shifts in gold seem to have already begun. This is indicated by data released by the World Gold Council last week on global inflows of gold ETFs.

In the wake of stock market turmoil in October, the WGC reported 16.6 tonnes of inflows for the month, with North America (up 12.4 tonnes) and Europe (plus 10.5 tonnes) recording the strongest gold appetite, Particularly meaningful, however, is a look at the development since the turn of the year.

In fact, the sentiment here is very mixed, with North America accounting for 58.1 tonnes of gold outflows in the first 10 months, while 48.2 tonnes were registered in Europe during the same period.

The main reasons for this are two problem areas: Italy’s debt and Britain’s Brexit.

The outlook for the current week

Inflation is on the rise – in some countries more, in others rather less. Last week, for example, Turkey reported an inflation rate of over 25% for October (see table), the highest level in 15 years.

Worldwide inflation rates

Oct-18 Dec. 17
euro zone 2.2 1.4
Germany 2.5 1.7
France 2.2 1.2
Italy 1.6 0.9
Spain 2.3 1.1
Portugal 1.0 1.0
Greece 1.8 0.7
Turkey 25.2 11.9
Canada 2.2 1.9
United States 2.3 2.1

 

A flood of further inflation figures is expected in the coming days. For example, for Germany an increase from 2.3 to 2.5 percent, for the United Kingdom an increase from 2.4 to 2.6 percent, for the US, an increase from 2.3 to 2.4 percent, for the eurozone an increase from 2.1 to 2.2 percent and for France an unchanged value of 2.2 percent.

This level of devaluation is a big problem, especially for German investors. They only achieve returns of 0.46 percent even on Bunds with a ten-year maturity. Systematic asset destruction is thus preprogrammed, especially as short-term maturities of up to six years currently even hit negative returns.

Anyone looking for asset protection and inflation protection will therefore always encounter one asset class: gold.