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Prof. Dr Willem Mastenbroek
Prof. Dr E. van de Bunt
Drs C. Visser



Editorial Staff

"Market model" can help France

The Scandinavian economic model, combining market flexibility with a high degree of social protection, "is full of lessons for countries such as France, Germany and Italy", said Bank of France governor Christian Noyer.

Asked about last month's appeal by UK Prime Minister Tony Blair for Europe to rethink its social model, Noyer told the Financial Times in an interview: "I tend to agree with that."
Sweden, Finland and Denmark have seen some of the fastest growth and lowest inflation rates among the main continental European economies.

"These countries ... have mixed a greater level of flexibility in labour and product markets - a bit like the UK economy - with a high degree of social protection, which is traditional in continental Europe," he said.

Social protection did not mean "a job for life even if your company is sinking. Protection means you have a social safety net to help you during a transitional period, and a whole system of education, training and retraining that obliges people to find a new job."

Responding to demands from some European politicians for an ECB interest rate cut, Noyer said the central bank - whose governing council he sits on - would take such a step only if it was clear its anti-inflation credentials were not at risk.

Otherwise "the danger would be that the markets would move up long-term interest rates in line with less favourable inflationary expectations. By sticking to our mandate we have in fact contributed to delivering a yield curve that is extraordinarily favourable for growth and job creation," he said.


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