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Europe's New Economy: Competition by Integration - Page 5© Peter Weber
Page 5
Sep 3, 2000
In the new millennium stock exchanges are condemned to become global, if they don’t want to fall behind. In the world-wide challenge the current alliances are now between the NYSE, Paris, Amsterdam and Brussels on one side and the NASDAQ, London, Frankfurt and Softbank’s JASDAQ on the other.
More demand for shares
In the 21st century Europe’s stock markets are due to become more central in economic and social life as well as in politics. Similar to the US, stocks will become a quite normal instrument of social insurance even in Europe. Most European governments are currently discussing or preparing incisive cuts on the pension system, which will oblige people to put at least some money on the stock market in order to guarantee their living standard in later years.
The European economy on the whole and the stock markets in particular are espected to perform better especially as higher company profits beckon following the big financial reforms decided this summer in Germany and France. On 14th July the German parliament has passed minister Eichel’s reform bill, which will cut taxes by 30 billion Euro a year. Putting through their financial reform, Schröder and his finance minister have already introduced a new era in which the growing economic and financial integration will be accompanied by harder competition even on the political field, where governments must increase their efforts to offer always the best conditions to business. The proof for this has been the prompt reaction of the French government which has not been losing time to follow, presenting a bill of similar dimensions at the end of August.
Towards political competition
With Europe’s biggest nations moving in the same direction, the other partners are almost obliged to follow. In fact, this time competition is not only between companies all over the continent, but also between national governments trying to create better conditions for business in order to attract new investments. Some of the minor and peripheral states such as Ireland or Finland have already shown that they can run the contest, sometimes even ahead of the big nations in a pivotal position. But now, after the introduction of the common currency, no partner can afford to remain in splendid isolation and immobility anymore. Fortunately the extra income from the UMTS-auctions and rising tax revenues give the European finance ministers increasing margins for lowering the tax pressure on companies and citizens. Thus France will surely not remain the last to follow the steps of Schröder’s Germany and Eichel’s courageous fiscal reform will soon produce its positive effects all over the continent.
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