As a distinguished guest at the Monaco Business Fair, Mathilde Lemoine, Group Chief Economist and member of Edmond de Rothschild’s Global Investment Committee, shared her analysis of major global economic changes. She also provided valuable insight into the uniqueness of the Monegasque model.
Indeed, we are going through a unique period since Bretton Woods. For the first time, we are moving from a system of globalisation to a system of rivalry between powers. The United States has chosen to rebalance its economic power relations by significantly increasing customs duties, not only on China but also on the European Union and many other partners.
Behind this policy lies a clear objective: to regain industrial power in the face of China, now the world’s leading manufacturing power. This paradigm shift is causing historic uncertainty, twice as high as in 2001, but it is also generating a dynamic of investment linked to sovereignty, whether economic, military or technological.
Europe today remains defensive. It too often continues to see the world as it would like it to be, rather than as it is. The United States, but also China, are investing heavily, while Europe has missed the boat on investment in physical and human capital.
We have accumulated successive crises – financial, sovereign debt, pandemic, energy crisis – without developing an offensive strategy. Our policies have supported consumption more than productive investment. However, in the face of an ageing population and technological upheavals, Europe must invest more in innovation and human capital, through education and continuing training.
Some southern countries, such as Spain and Italy, have taken advantage of European funds to modernise their economies. But overall, it is urgent that Europe adopt a long-term, strategic and proactive vision.
It is a major opportunity, provided it is viewed as an investment and not simply as a cost. Monaco is a shining example of this, with pioneering initiatives such as thalassothermy and energy diversification. These choices create an innovative and sustainable ecosystem.
On the other hand, Europe suffers from a lack of clarity and consistency in its energy strategy. Business leaders are quick to point out that it is not the rise in energy prices that worries them most, but the lack of a clear vision, which is a source of uncertainty. The energy transition must be a driver of sovereignty and competitiveness, not an additional factor of dependence, particularly on China.
The US strategy has profoundly transformed bond markets. Today, more than half of US debt is held by US residents, reducing dependence on foreign investors. This generates a certain amount of volatility, particularly on long-term rates and the foreign exchange market, but it is the result of a deliberate policy of economic sovereignty.
For European countries, and particularly for France, the rise in long-term interest rates is problematic. It reflects increased uncertainty rather than growth. This weighs on companies’ investment capacity and undermines the sustainability of public debt.
The Principality has a unique model that is well suited to the current context. Its institutional stability is a key asset, creating what we call a ‘positive risk premium’. In other words, the visibility and consistency offered by Monaco reinforce its credibility with investors.
The Principality has been able to anticipate major challenges: energy transition, economic diversification and attracting talent. It enjoys higher growth than the eurozone and has successfully integrated into international networks. In a period of global transition, where uncertainty prevails, this agility and strategic consistency are assets.
Monaco is not just a safe haven. It is a dynamic economy, capable of innovation and adaptation. Its geographical position, its role as a crossroads and its international openness make it an attractive hub, not only for finance and real estate, but also for technology companies and start-ups.
We must remain clear-headed, because we are living in a period of structural uncertainty. But we must also remain confident: the transition to a new global system is creating new opportunities, particularly in sectors related to sovereignty, innovation and energy transition.
The key lies in the ability of states and businesses to invest for the long term and develop their human capital. In this area, Monaco has taken a step ahead, and its example can inspire beyond its borders.
