Aurelia Butler

The UK economy expanded in the first quarter, showing greater resilience than forecast a few months ago.UK GDP rose by 0.1 per cent between the final quarter of 2022 and the first three months of this year, according to data published by the Office for National Statistics on Friday. The expansion followed a 0.1 per cent growth rate in the previous quarter and came despite previous predictions of recession. The Bank of England said on Thursday it expected the economy to stagnate in both the first and second quarters with growth accelerating in the rest of the year. By contrast, in February the BoE had forecast a recession lasting throughout 2023 and into the first quarter of next year. The central bank no longer expects such a long contraction thanks to lower energy prices, stronger global growth and more robust consumer and corporate confidence.Ruth Gregory, economist at Capital Economics, said there was “still no recession, but with the full drag from higher interest rates yet to be felt it is too soon to sound the all-clear”.The Bank of England raised interest rates a quarter of a percentage point to 4.5 per cent on Thursday — a 15-year high.The ONS noted that first-quarter growth was driven by IT and construction. This was partially offset by falls in health, which registered a 0.5 per cent reduction, and education and public administration, both down 0.7 per cent partly due to the impact of strike action.Government consumption and net trade were also a drag on growth as exports fell 8.1 per cent, a larger contraction than the 7.2 per cent slide for imports. Business investment rebounded by 0.7 per cent, as companies took advantage of tax incentives to invest that expired at the end of March, but remained 1.4 per cent below its pre-pandemic level.The quarterly GDP rate was boosted by growth in January, which was revised up to 0.5 per cent. But output fell by 0.3 per cent between February and March, as the services sector stuttered. By contrast, economists polled by Reuters had forecast GDP to be flat in March.Noting the “widespread decreases across the services sector” in March, Darren Morgan, director of economic statistics at the ONS, said cars sales in the month were low by historic standards, with warehousing, distribution and retail also performing poorly.In March, the UK economy was 0.1 per cent above its pre-pandemic level of February 2020 on the monthly reading. However, on the internationally comparable quarterly figure, GDP was still 0.5 per cent below the level of the final quarter of 2019, before the pandemic hit. This is a much poorer performance than those logged by the US, whose economy rose by 5.3 per cent over the period and the eurozone, up by 2.5 per cent.The UK is “still at the bottom of the G7 league table”, said Samuel Tombs, economist at Pantheon Macroeconomics. He said this chiefly reflected weakness in households’ real spending, but added that “at least the magnitude of the underperformance is not increasing relative to other countries in Europe”. More

A senior Federal Reserve official has warned recent US inflation and employment data had not convinced her that price pressures are under control as she left the door open to voting for more rate rises.Michelle Bowman, a voting member on the Fed’s policy-setting committee, said the US central bank’s attempt to tighten financial conditions and damp the economy were having the “desired” effect, but she stopped short of endorsing a pause in rate rises.“In my view, the most recent [consumer price inflation] and employment reports have not provided consistent evidence that inflation is on a downward path,” she said at an event in Frankfurt on Friday. Bowman said she wanted to see more data before deciding whether to vote in favour of holding rates at their current level when the committee next meets in June.“Should inflation remain high and the labour market remain tight, additional monetary policy tightening will likely be appropriate to attain a sufficiently restrictive stance,” she added.Earlier this month, Jay Powell, the Fed chair, sent a strong signal that the central bank was preparing to hold off on another rate rise next month, after raising the benchmark rate above 5 per cent at its most recent meeting.“We feel like we’re getting close or maybe even there,” he said, pointing to the effect of rate rises and an expected credit crunch stemming from recent bank failures.Bowman’s comments suggest Powell will need to forge a consensus on what looks like an increasingly divided committee. Other voting members such as Austan Goolsbee of the Chicago Fed seem to be more worried about the credit crunch.Meanwhile, Bowman also warned her colleagues against a knee-jerk reaction following the recent implosion of Silicon Valley Bank and other lenders. She said implementation of new rules and regulations should not take place until there was a deeper investigation of what went wrong.Bowman called for a fresh review conducted by an independent third party to “supplement” what she described as the “limited internal review” that was published by the Fed’s vice-chair for supervision, Michael Barr, late last month.

Such a report “would help to eliminate the doubts that may naturally accompany any self-assessment prepared and reviewed by a single member of the board of governors,” added Bowman.In that report, Barr said SVB’s failures stemmed from the weakening of regulations during the administration of Donald Trump and mistakes by internal supervisors who were too slow to act on the errors of the bank’s management.Barr also signalled his support for stronger supervision and regulation for banks with more than $100bn in assets, changes that would not require congressional approval.Bowman acknowledged that some changes, especially with regard to how the Fed supervises lenders, are likely necessary but pushed back on the need for “radical reform of the bank regulatory framework”.“We should avoid using these bank failures as a pretext to push for other, unrelated changes to banking regulation,” she said. More

In a laboratory in College Station, Texas, in 1990, six lab rats pressed levers and lapped at tubes as root beer and tonic water were released. They were participating in the quest for an elusive quarry: the Giffen good.Robert Giffen was born in Lanarkshire in 1837, the year of Queen Victoria’s accession. He would become by turns assistant editor at The Economist, chief statistician at the Board of Trade, President of the Royal Statistical Society and co‑founder of the Royal Economic Society. An eminent Victorian indeed, even if one biographer sniffed, “He was one of those figures . . . whose not inconsiderable power and prestige appears to be disproportionate to their actual contribution to economic science.” Ouch.Yet Giffen’s name is known to every economics student. This is not because of the research he published, but because of a thought experiment which reached his contemporary Alfred Marshall, who put it in his inescapable textbook Principles of Economics. The idea is that certain goods might be consumed more when their prices rise, because the increased cost backs consumers into a corner.Here’s how I imagined it, as an impoverished student. My staple diet was jacket potatoes with cheese or tuna mayo, bought from a nearby kebab van. Imagine that the price of potatoes rose. Ordinarily, I’d be expected to buy fewer potatoes and more of something else.The problem is everything else was still more expensive than potatoes. With my budget squeezed, I couldn’t afford the luxury of the cheese and tuna topping. The missing calories would come from . . . more potatoes.In this example, potatoes are a “Giffen good”. Potatoes were a major part of my diet; when their price rose, I effectively became poorer and switched towards the cheapest foodstuff. The cheapest foodstuff was potatoes. Of course, this did not actually happen. I was never that destitute and never such a potatophage. For about a century, economists looked for real examples of Giffen goods and did not find them until 1990, when economists Raymond Battalio, John Kagel and Carl Kogut demonstrated Giffen behaviour in lab rats. (The lab rats, I am assured, were well looked after by Battalio’s neighbour, a vet.) The researchers offered the rats quinine-flavoured water, which the rats disliked, and root beer, which they loved. The effective prices of these drinks were changed by adjusting the volume of drink released each time the rat pressed a lever. Root beer was “expensive” because it was dispensed in smaller portions. And sure enough, it proved possible to provoke Giffen behaviour: when the cheaper quinine water became less cheap, rats still needed a drink and they cut back on the luxury of root beer, drinking more quinine water.So are Giffen goods little more than a theoretical curiosity? Not quite. Eventually, the economists Robert Jensen, Nolan Miller and Sangui Wang used both public health data and a field experiment to demonstrate that in the poorest parts of Hunan, China, rice was a Giffen good. As Jensen wrote in 2008, “It’s funny that people have looked in crazy places for Giffen behaviour . . . and it turns out that it could be found in the most widely consumed food in the most populous nation in the history of humanity.”Giffen goods also teach us something important about the impact of price rises on the poorest people. One of the most basic lessons of economics is that people respond to price hikes by finding cheaper options. If apples are expensive this week, buy oranges; when the price of oranges rises and the price of apples falls, switch back to apples again. Or just look for the bargain-basement option. If a West End show is too expensive, go to the cinema. If the cinema costs too much, watch television. You don’t have to pay higher prices; you can make do with a cheaper alternative. Inflation is always a little lower than it seems once you allow for such substitutions. But one group of people can’t play that game: those who are already relying on the cheapest staples have nowhere to run from price rises.

So it wasn’t quinine water in a Texas laboratory, or rice in Hunan, that made me think recently of Giffen goods. It was the alarming rise in the price of a cheese salad sandwich. The latest data from the UK show that sliced white bread has risen in price by 29 per cent over the past 12 months, with tomatoes up 16 per cent, butter up 30 per cent, cheddar cheese up 42 per cent and cucumber 55 per cent more expensive. (Headline inflation, meanwhile, is just over 10 per cent.)I am not claiming that cheddar cheese is essential to life; it just seems that way. Nor is it a Giffen good. But basic foodstuffs are Giffen-adjacent. They are the last resort of people who cannot afford fancier stuff. Food poverty campaigners — most prominently Jack Monroe — have argued that the price of these basics has risen much faster than the general rate of inflation. As I’ve written before, it’s hard to be sure if that’s true. The Office for National Statistics tends to focus on the most popular products, not the cheapest bargains, and so the relevant data is patchy and experimental.Whether or not inflation really is higher for the poorest households, what is not in doubt is that inflation hits them hardest. That is both because they are more vulnerable, and because they have less room for manoeuvre as they ponder their options in the supermarket aisle. The Bank of England’s chief economist, Huw Pill, recently said that, “We’re all worse off.” Maybe so. But some of us are worse off than others. Tim Harford’s children’s book, “The Truth Detective” (Wren & Rook), is now availableFollow @FTMag on Twitter to find out about our latest stories first More

It was a moment of triumph for Jochen Hanebeck, boss of German chipmaker Infineon, as he broke ground on the company’s new €5bn semiconductor plant in the east German city of Dresden earlier this month. And there was one man, he said, who had made it all happen.Addressing his guest of honour, chancellor Olaf Scholz, he thanked him for providing “substantial budgetary resources” to support the German chip industry. “At a time when our country is facing so many great challenges, that’s quite a feat,” he added.Over the past couple of years, Germany has attracted massive investments in its chip sector. Intel, Wolfspeed and Infineon are all building big new factories. The largest chipmaker of all, TSMC of Taiwan, reportedly might follow suit.But the new fabrication plants, or fabs, are coming at an eye-watering cost. Scholz’s government is throwing billions of euros in subsidies at the tech companies to lure them to Germany — €1bn in the case of Infineon’s new plant.“That’s €1mn in state grants for every new job created, just to improve our security of supply by a little bit,” Clemens Fuest, head of the Ifo, a leading economic research institute, told ARD TV. “Even if it all works, we’ll still be importing 80 per cent [of our chips] by 2030.”The sudden passion for subsidies comes at a time of growing alarm in Europe over the fragility of its supply chains and its huge dependence on Taiwan and South Korea for a resource that Scholz in Dresden described as the “oil of the 21st century”.The end-of-days scenario stalking the corridors of government in Berlin and Brussels: China invades Taiwan, source of more than 90 per cent of the world’s most advanced chips, and the supply of semiconductors dries up, bringing factories the world over to a standstill.Saxony Premier Michael Kretschmer, European Commission President Ursula von der Leyen, Infineon boss Jochen Hanebeck, German Chancellor Olaf Scholz and Dresden Mayor Dirk Hilbert prepare to symbolically break ground for the new fab in Dresden this month © Getty Images“We saw last year what a mess we’d got into with our energy dependence on Russia, how fatal that was,” says Michael Kellner, state secretary at the German economy ministry. “The lesson from that is, in terms of our chip production, we in Europe have to have greater autonomy.” The EU’s response has been to loosen state-aid rules and mobilise billions of euros in grants for tech companies. Officials argue they have no choice: the US is enticing chip manufacturers and clean energy companies with a vast array of financial incentives, and if Europe fails to act it risks losing the race for the technology of the future.“In the competitive situation we’re in globally with fabs, everybody dopes,” says chip industry expert Jan-Peter Kleinhans of Stiftung Neue Verantwortung, a think-tank. “And whether you like it or not, if you don’t dope, you cannot compete.”But the level of state support is beginning to reach levels that even advocates of more chip investment find excessive. Intel, for example, was due to receive €6.8bn in government support for its new fab in the east German city of Magdeburg. Yet it is now demanding around €10bn. Critics are questioning why it should get so much state aid, especially when there’s so little domestic demand for the cutting-edge chips it plans to produce in Germany.Intel’s fresh demands for cash have unleashed a heated debate among economists about whether it’s the best use of taxpayers’ money. “This may lead to a significant misallocation of resources,” says Reint Gropp, head of the Leibniz Institute for Economic Research, Halle (IWH). “It would probably be more efficient to just buy cheap subsidised chips from the US.”Where the US leadsThe decision to open the subsidy floodgates in Europe was a direct response to the new, activist industrial policy being pursued by the US. At issue are the Biden administration’s Chips and Science Act, a $280bn package that includes $52bn in funding to boost US domestic semiconductor manufacturing, and the Inflation Reduction Act, which provides $369bn of subsidies and tax credits for clean energy technologies.The legislation put the EU in a quandary: should it match it with financial support of its own, in the midst of a cost of living crisis that was putting huge strain on Europe’s citizens and member states’ public finances? Or should it ignore them and run the risk of its companies defecting to the US?The EU chose the first route. It has enacted its own Chips Act, which aims to mobilise €43bn in public and private investments for the bloc’s chip industry, and in so doing double its share of the global semiconductor market from less than 10 per cent today to 20 per cent by 2030.One of the EU’s main motivations was the traumatic memory of the havoc wreaked by the Covid-19 pandemic. Lockdowns and trade chaos disrupted global chip supply, causing production shutdowns across the auto industry.“We lost 1-1.5 per cent of our GDP in 2021 because of a lack of semiconductors — or about €40bn,” says a senior German official.But the spectre of conflict over Taiwan is much more alarming. Speaking at the Infineon groundbreaking ceremony, Ursula von der Leyen, European Commission president, noted that any disruption to trade caused by tensions over Taiwan “could do immediate and serious harm to Europe’s strong industrial base and our internal market”. The response, she said, must be to “put our chip production on a broader footing and expand our own capacities”.If the only way to achieve that is to offer billions of euros in financial support to tech giants, then so be it, officials say. “I’m no great fan of subsidies,” says Kellner. “It would be great to be able to abolish them all. But that’s just impossible. And we have to live in the real world.” But the shift has proved painful for the academic economists still wedded to the principles of German “ordoliberalism”, with its abhorrence of state intervention in the economy and the idea of granting subsidies or tax privileges to certain industries.Critics of the EU’s drive for greater self-sufficiency also claim it is misguided: it misses the point that materials for chip production are just as critical as the chips themselves — and the market for them is often just as concentrated. Kleinhans says one reason — of several — for the semiconductor crisis during the pandemic was a shortage of ajinomoto-build-up-film substrate, an insulating material which is used in high performance processors and is made by just a handful of manufacturers.Chip fabs also depend heavily on imported chemicals, he says: “To produce a modern semiconductor you need about 80 per cent of the periodic table in terms of elements.” So even if all the fabs that have been announced for Europe are actually built, “we will continue to depend on chemicals from foreign countries — there’s just no way around that”.Some economists have, for that reason, argued that Germany should consider alternatives to showering money on tech companies — such as trying harder to improve the business environment and making it more conducive to innovation. A lot needs to be done: companies routinely complain about Germany’s poor digital infrastructure, its shortage of IT workers, its burdensome regulation. “Believing that giving money to companies can fix all those problems is simply wrong,” says Marcel Fratzscher, head of the DIW think-tank.It is also far from clear that Germany and the EU can win the subsidy race. Data compiled by Everstream, a supply chain data company, show there were investments totalling $122bn in new chipmaking capacity in the US between 2021-25, compared to just $31.5bn in the EU.“Worldwide subsidies for chip production total more than $700bn,” says Gropp. “So with its €43bn the EU’s not really making much of a dent.”Meanwhile, despite the EU’s move to open its purse-strings, it is still proving painfully slow to approve applications for financial support. US chipmaker Wolfspeed and ZF, a German automotive supplier, announced in February they were teaming up to build a chip plant in the west German state of Saarland. They are still waiting for a decision from Brussels to approve the subsidy they requested, as is Infineon.Value for money?However vehement the critics, business groups in Germany have generally given a warm welcome to the new state aid regime announced by the EU, and credit it with an upsurge in chip investment.Indeed, Germany has over the past couple of years attracted some of the world’s largest semiconductor companies to its shores. Intel’s €17bn fab in the eastern city of Magdeburg will be its biggest in Europe. Wolfspeed and ZF’s planned €2.5bn plant will produce silicon carbide chips, used in electric vehicles, solar cells and industrial hydraulic systems. And then there’s Infineon’s “smart power fab” in Dresden which will make power semiconductors and analogue mixed signal components, used in power supply systems and data centres.Stefan Hain of ZF Group holds a power module of an energy converter. ZF and Wolfspeed plan to build a semiconductor plant in Saarland © Harald Tittel/picture-alliance/dpa/AP ImagesAll of them will receive big subsidies, Intel the biggest. But, faced with higher costs, it now wants more. One driver is the company’s worsened financial outlook. Chief executive Pat Gelsinger slashed Intel’s dividend to shareholders by nearly two-thirds in February to conserve cash. Late last year it announced it would seek cost savings of $10bn by 2025.Some German officials have expressed sympathy with the company’s demands, chief among them Sven Schulze, economy minister of the state of Saxony-Anhalt, of which Magdeburg is the capital.“The world has changed — energy and construction costs have gone up and Germany’s competitive position globally has worsened,” he says. “It’s no use to anyone if manufacturing is so expensive here that [Intel’s] products are no longer competitive on international markets.”But others are less amenable. “We will not let ourselves be blackmailed,” finance minister Christian Lindner told the German business daily Handelsblatt in February. “A US company that made $8bn net profit [last year] is not a natural recipient of taxpayers’ money.”He also wondered aloud whether the chips that Intel will produce in Magdeburg “are really needed by German industry” or will simply be sold into the global market.Lindner’s point has been taken up by others, too. Germany has strong demand for “power semiconductors”, tailor-made chips for industrial applications and the automotive sector, which will be the mainstay of Infineon’s new fab in Dresden. But Intel’s Magdeburg plant will make “leading edge” chips, which are needed for things like AI.Similar arguments over where to focus the firehose of government investment in semiconductors are playing out in other parts of the world. Silicon Valley companies such as Apple and Nvidia are overwhelmingly reliant on TSMC’s unparalleled capabilities in producing the cutting-edge chips that power iPhones or OpenAI’s breakthrough ChatGPT chatbot. Any interruption to the Taiwanese manufacturer’s output would quickly throttle the availability of many of the world’s most popular tech products, used by millions of consumers every day.But outside an elite handful of American Big Tech companies, a far larger number of businesses depend on older chips to produce cars and household appliances — at a time when Chinese semiconductor companies, under pressure from US sanctions, are ramping up their investment in these more “mature” chips.Kleinhans, of the SNV think-tank, says demand for semiconductors in Germany is strongest in the automotive industry, industrial automation and in the manufacturing of medical devices.“None of them need cutting-edge chips in large quantities,” he says. The car industry, for example, needs semiconductors made according to “older manufacturing technologies” that have long been in the market.Others agree that Germany and the EU, with its Chips Act, are making a mistake by placing such a big bet on cutting-edge chips. The approach “threatens to ignore the actual needs of Europe’s key industries”, says ZVEI, a trade body which represents Germany’s electronic and digital sectors.VW’s shuttered Wolfsburg plant during Covid lockdowns in 2020, when trade chaos caused production shutdowns across the auto industry. Geopolitical tension over Taiwan has raised concerns over the fragile semiconductor supply chain © Getty ImagesOfficials dismiss that argument. “In terms of digitisation . . . Germany is really failing to keep up with other developed economies,” says Kellner from the economy ministry. “And if we just stick with the old technologies, we’ll fall even further behind. And that’s not the logical path.”Intel has also dismissed the claim that there is no domestic market for the chips it will produce in Magdeburg. “There’s lots of applications for leading-edge technology in cars — autonomous driving, recognising obstacles, the entertainment system, for example,” says the company’s Europe spokesman Markus Weingartner.Intel also plans “accelerator programmes” to help the car industry introduce leading-edge technologies into its systems, he adds.That view is shared by experts. “Intel Magdeburg is a strategic investment and a bet on the future,” says Lukas Klingholz of the digital association Bitkom. “We don’t know exactly how demand for leading-edge chips will develop in Europe, but it’s definitely going to grow overall over the next few years. And so far, Europe has no capacity and knowhow to produce them.”Indeed, according to Kearney, the management consultancy, European demand for leading-edge semiconductors will grow by 15 per cent every year, compared to just 3 per cent a year for more mature chip technologies. Making sure the EU has its own leading-edge chip factories is an “investment in Europe’s resilience and sovereignty”, says Klingholz.The site of the planned Intel fab near Magdeburg. Intel’s demands for more government support have caused heated debate about whether it’s the best use of taxpayers’ money © Getty ImagesScholz’s government appears open to increasing the amount of state aid to Intel — but only if the company raises the volume of investment earmarked for Magdeburg. Officials say Intel is open to that; the company declined to comment. “There are good reasons for Intel to increase the level of investment, and for that reason, there are also good reasons to look again at how much support Germany and the EU will provide,” says one official.“The level of state aid depends on how much [the company] invests,” says Kellner. “It’s quite normal that additional state support depends on the total investment volume that is deployed.”Meanwhile, the government has also sought to provide comfort to Intel on the question of energy costs, which have ballooned in Germany since Russia’s invasion of Ukraine. Earlier this month Kellner’s ministry put forward plans to subsidise the cost of electricity for energy-intensive industries, proposing that prices be capped until 2030 at €0.06 per kilowatt hour — about half their current level. The estimated cost to the public purse will be €25bn-€30bn.“The point of this is to create an attractive business environment for energy-intensive companies — including those that produce semiconductors and batteries,” says Kellner. “Clearly this agenda is going to benefit the whole semiconductor industry — not just Intel but others, too, such as Infineon and Wolfspeed.”The proposed reform shows how determined Scholz and his government are to make sure that Germany becomes a major player in the global chip industry. At Infineon’s groundbreaking in Dresden, Scholz said chips were pivotal to Germany’s plans to derive 80 per cent of its electricity from renewable sources by 2030 and go carbon neutral by 2045. All the things needed for that — wind turbines, solar panels, heat pumps and electric vehicles — had one thing in common: chips. “We need semiconductors,” he said. “Lots and lots of semiconductors . . . And that’s why we have to strategically expand our own capacities [to produce them] in Europe.”Additional reporting by Tim Bradshaw More

The writer is president of FranceIn a few days, more than 200 international chief executives will arrive in Versailles to take part in an event entitled “Choose France”. Many of them will unveil investments in strategic areas. Since the first of these events in 2018, thousands of jobs and hundreds of factories have been set up, with more than 200 new plants established in France in the past two years alone. We are committed to building back French industry and fostering our economic power. This will allow us to strengthen our public services and invest in our future. We are acting with unwavering determination at the national level, with the result that in 2022, according to a survey by EY, we were the most attractive country in Europe for foreign investment for a fourth year running. However, this battle for re-industrialisation must obviously be fought on a European scale, as well. Since becoming president of France in 2017, I have consistently argued for the idea of European sovereignty. At first this was seen as wishful thinking, and at times perceived as too French. However, during the past few years the EU has had to face two pivotal crises. And, because of the Covid-19 pandemic and the war Russia decided to inflict on Ukraine, we have acknowledged our strategic dependencies and decided to act to reduce them. We Europeans reached this defining consensus at a summit in March 2022, also at Versailles. We agreed on the importance of remaining in control of our own destiny and we paved the way for a more sovereign Europe, with tangible decisions taken on defence, energy and economic security. We are no longer naive. Without compromising our openness, we are acting to protect our interests, our independence and our values, and to assert our European economic and social model. What we need now is a comprehensive framework to implement this European consensus on sovereignty. I propose a doctrine based on five pillars.The first pillar is the most obvious: a commitment to competitiveness, greater integration and the deepening of the EU single market, which is the first condition for creating European champions in the areas of clean tech and artificial intelligence.By contrast, industrial policy, the second pillar, has long been taboo. But in the past few months we have revamped this old concept and turned it into a powerful lever to meet the challenges of the ecological and digital transitions, as well as to match the ambition of our partners and rivals. The European Chips Act will boost research and development and the production of European semiconductors. The Net Zero Industry Act will simplify existing rules and drive more investment and skills to green and clean technology. In March, the European Commission announced amendments to state aid rules in order to better support Europe’s strategic industries. This has been accompanied by decisive progress on the reform of the electricity market. The third pillar is the protection of vital European interests and strategic assets. The EU has, for the first time, created a tool to block foreign acquisitions of strategic European companies. And we have to be bold when it comes to the question of technological decoupling and the strengthening of export controls. Next is reciprocity, the fourth pillar. It means that our trade agenda should be both ambitious and consistent with our broader political objectives. It must therefore be sustainable, fair and balanced, and pursue clear European strategic interests. The final pillar in the framework is multilateral solidarity. Sovereignty does not mean self-reliance and the EU can thrive only in the context of global development. I have invited the countries of the global south to come to Paris in June to lay the groundwork for a new international financial framework. We have to implement this doctrine without delay. We have to take back control of our supply chains, energy and innovation. We need more factories and fewer dependencies. “Made in Europe” should be our motto. We have no choice, as sovereignty is intertwined with the strength of our democracies. For decades, the backbone of Europe’s economy was a middle class with well-paid industrial jobs confident that the next generation would be more prosperous than the last. In Versailles next week, and in the coming months, we Europeans can prove that our continent, the cradle of the Industrial Revolution, can once again be the home of flourishing industry and shared progress. More