/ world today news/ The European Union and the United States are currently negotiating the Transatlantic Trade and Investment Partnership (TTIP), designed to further integrate their economies.
As is common with most trade agreements, the TTIP negotiations are accompanied by a series of economic agreements to the benefit of all parties involved.
Serious consequences lie ahead for the EU and its members, as the TTIP studies do not provide a reliable basis for policy making, as they are based on an inappropriate economic model. The Institute for Global Development and Environment offers an assessment of TTIP based on the UN Model for World Politics. The results differ radically from existing estimates.
According to the new data, TTIP will lead to losses in terms of net exports. Northern European economies will suffer the biggest losses (2.07% of GDP), followed by France (1.9%), Germany (1.14%) and the United Kingdom (0.95%).
The reduction in GDP will again affect the northern economies (0.5%), followed by France (0.48%) and Germany (0.29%).
The agreement will result in a loss of labor income. France will suffer the most, with losses of €5,500 per worker, followed by northern European economies (€4,800 per worker), the UK (€4,200 per worker) and Germany (€3,400 per worker).
TTIP will lead to job losses. Around 600,000 jobs will be lost in the EU. Northern European countries will be hardest hit with 223,000 fewer jobs. It is followed by Germany with minus 134,000 jobs and the southern European countries, which will lose 90,000 jobs.
TTIP will lead to a loss of government revenue. Indirect tax revenues will fall in all EU countries, with France hit hardest with losses of 0.64% of GDP. Government deficits will increase as a percentage of GDP in every EU country, pushing public finances closer to or beyond the Maastricht limits.
With consumption growth weakening, gains cannot be expected from sales growth. A more realistic hypothesis is that profits and investment (mostly in the area of financial assets) will be supported by rising asset prices.
“Our forecasts point to a gloomy outlook for EU policies. Faced with higher vulnerability to
any crises coming from the US and the inability to coordinate fiscal expansion, they will be left with few options to stimulate the economy – an increase in private lending with the risk of financial imbalances, competitive devaluations or a combination of the two,” warns the Institute for Global Development .
Two main conclusions follow from their calculations. On the one hand, the results of the calculations show that there is no adequate basis for important trade reforms. On the other hand, seeking greater trade volume is not a sustainable EU growth strategy. In the current context of austerity, high unemployment and low growth, increasing pressures on labor income would contribute to the damage to economic activity. Any viable strategy to ignite economic growth in Europe will need to be built with strong political effort.
Washington / USA
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