Read the complete interviews - Accuracy

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Read the complete interviews - Accuracy

Figures for decision

Activity report 2011

Interviews

We have presented these interviews in their

original language so as to not distort the subject.


At the start of 2012,

the outlook for the world economy remains uncertain and highly divergent..

Most emerging economies have shown an upturn and while there has been moderate recovery in North America, prospects for growth

in Western Europe remain weak. Furthermore, countries in the West continue to struggle to restore their public finances. Their central

banks have been injecting massive amounts of cash into the economy, maintaining structural imbalances and inflating asset values.

For each country where Accuracy is present, an expert provides clarity and analysis in their field.

.

CANADA

Mr Roland Lescure

Premier Vice-President and Head of Investments,

Caisse de dépôt et placement du Québec

THE NETHERLANDS

Mr Dick Verbeek

President and member of the board of

several international financial services firms

UNITED KINGDOM

Mr Michael Ward

Director of Trade and Investment,

UK Trade & Investment

GERMANY

Mr Jack Artman

Senior Director, Head of M&A,

Infineon Technologies AG

FRANCE

Mr Jean-Pierre Petit

Economist,

President - Les Cahiers verts de l’économie

INDIA

Mr Karan Bhagat

CEO,

IIFL Private Wealth Management

01

ITALY

Mr Andrea Andorno

Vice-President Finance, Alitalia

SPAIN

Mr Juan Iranzo

Dean of the Madrid College of Economists

and Vice-President of the Instituto de Estudios

Económicos


CANADA

Roland Lescure,

Premier Vice-President and Head of Investments

Caisse de dépôt et placement du Québec

Comment réagissez-vous à cette thématique d’ensemble

La politique monétaire est pour le moins créative dans les pays occidentaux. C’est sans doute un passage obligé. Suivant la crise

financière, le désendettement des ménages et des gouvernements force les banques centrales à appliquer une politique monétaire

atypique en réponse à une reprise économique mondiale plus faible qu’à l’accoutumée. Comme le désendettement prendra

encore un certain temps, cette dynamique de faible croissance et d’interventions monétaires devrait perdurer. Elle permet tout

simplement de gagner du temps dans un processus de désendettemment qui en a cruellement besoin.

Comment voyez-vous les problématiques et enjeux spécifiques de votre pays / ou zone

Le Canada est un des grands bénéficiaires de l’urbanisation des pays émergents, qui se traduit par un besoin important de

matières premières. Il profite aussi de la solidité de son sytème bancaire, lié à des règles prudentielles plus exigeantes que la

moyenne. Enfin, le faible endettement public rend la situation du Canada enviable par rapport à la quasi-totalité des pays développés.

En contrepartie, l’économie intérieure ralentit puisque les effets stimulants des politiques marcroéconomiques sont

maintenant épuisés. En outre, les consommateurs canadiens sont lourdement endettés ce qui hypothèquera sans doute la croissance

future. Au niveau des entreprises, la force du dollar canadien continue de poser un défi considérable pour les secteurs

exportateurs non directement reliés aux matières premières.

Quelles seront selon vous les grandes transformations ou évolution économiques du monde / de votre pays, dans les

cinq années qui viennent

Les pays émergents doivent poursuivre leur programme qui vise l’urbanisation et l’émergence de la classe moyenne sans provoquer

de dérapage des prix. Leur croissance réelle devrait encore surpasser largement celle des pays développés au cours des

cinq prochaines années et soutenir les prix des matières premières. Dans ce contexte, le Canada est très bien positionné. Cela

dit, davantage d’investissement seront requis pour améliorer la croissance de la productivité de la main-d’œuvre canadienne et

faire croître plus rapidement le stock de capital. Le Monde occidental dans son ensemble doit résoudre l’équation quasi-impossible

qui vise à conjuguer rigueur dans le désendettement et ambition pour la croissance. Que de défis !

Les effets du vieillissement de la population commenceront également à s’observer dans la plupart des pays développés, ce qui

aura une rétroaction sur les finances publiques.

Quelles sont selon vous les thématiques microéconomiques ou secteurs les plus porteurs pour les années qui viennent

Plusieurs pays émergents voudront sans doute améliorer l’état de leurs infrastructures et certains pays développés voudront les

rajeunir. Dans cette optique, ce secteur semble être porteur. Le secteur des technologies de l’information devrait également bien

tirer son épingle du jeu et poursuivre l’innovation réalisée au cours des dernières années. Un marché de plus en plus important

se dessine sur ce plan auprès des pays émergents. L’ascension de la classe moyenne des pays émergents devraient également

engendrer une forte croissance des déplacements dans le monde et assurer une bonne croissance des industries du transport.

Finalement, le secteur de l’énergie, surtout aux État-Unis, sera sur la sellette. Les récentes découvertes de gaz de schiste risquent

de venir perturber l’environnement énergétique actuel aux États-Unis. Des effets de substitution pourraient à terme faire

diminuer les coûts de l’électricité pour les entreprises, un facteur positif pour l’économie américaine.

Comment voyez-vous le marché du M&A dans votre pays Avec les pays partenaires

Les ressources naturelles du Canada seront encore probablement convoitées par les investisseurs étrangers étant donné les

prévisions d’une demande soutenue au cours des prochaines années.

02


FRANCE

Jean-Pierre Petit,

Economist, President - Les Cahiers verts de l’économie

Au risque de la caricature, la fin 2011 avait été caractérisée par les trois « R » : a) une Récession européenne ; b) une Résistance

américaine ; c) un Ralentissement asiatique et émergent.

L’économie mondiale se redresse maintenant progressivement, grâce notamment au retour de l’esprit de compromis et coopération

aux USA (accord budgétaire républicains/démocrates), dans le monde (accord de swaps en dollars à la fin novembre) et en

Europe. L’esprit de compromis manifeste en effet quelques progrès en Europe. Il y a eu une attitude progressivement plus compréhensive

de l’Allemagne à l’égard de la nécessité de la croissance et à l’égard de l’extension de capacité de l’ESM (European

Stability Mechanism) qui entrera en vigueur l’été prochain. Les discours plus réalistes et pragmatiques de M Draghi et la mise en

place de la LTRO (fourniture illimitée à 3 ans de liquidités aux banques) participent de ce mouvement.

Ajoutons que la baisse passée du prix des matières premières a permis de maintenir la demande finale mondiale et aux mesures

de relance monétaire (en Asie, Amérique latine et dans le monde) de se mettre en place. Dans le monde riche, la nouvelle

politique de communication de la Fed signifie qu’il n’y aura pas de hausse des taux courts avant fin 2014 et qu’une nouvelle

phase de Quantitative Easing est probable avant l’été. En zone euro, c’est la LTRO qui constitue la meilleure illustration de cet

assouplissement monétaire. Dans le monde émergent, on observe une baisse des réserves obligatoires en Chine et, plus récemment,

en Inde ainsi qu’une amorce ou poursuite de la baisse des taux au Brésil, aux Philippines, Israël, Chili, Taïwan, Thaïlande,

Indonésie,…

Les signes d’une ré-accélération cyclique mondiale se sont mis en place, comme le montre le redressement généralisé des

indices PMI, y compris en Europe. L’économie américaine manifeste toujours une belle résistance et peut envisager une croissance

de l’ordre de 2% (voire un peu plus) dans les prochains trimestres, malgré la récession modérée en Europe. Les dernières

enquêtes démontrent la relative vigueur du redressement de l’emploi. Au total, la hausse cumulée de l’emploi depuis le démarrage

de la reprise aura atteint 3,2 millions (selon la « payroll survey »). Si l’on se souvient que les pertes cumulées avaient atteint

8,8 millions durant la grande récession (2007-09), il y a indéniablement, comme nous l’avons souvent souligné, un potentiel

significatif de rattrapage.

Ce redressement ne doit pas conduire à un « emballement » dans les anticipations de croissance.

Ainsi aux Etats-Unis, il n’y aura pas de très forte accélération:

• D’abord, le relatif dynamisme de la croissance américaine en fin d’année 2011 doit pour beaucoup à des phénomènes non

extensibles; fort restockage, probable avancement des dépenses d’investissement des entreprises avant la fin d’avantages

fiscaux au 31 décembre, baisse du taux d’épargne des ménages au T3,…

03

• En outre, la croissance restera heurtée par certains facteurs :

a) Une restriction budgétaire de l’ordre de 0,7 point de PIB en année pleine avancée sur le 1er semestre. Cela est heureusement

moins négatif que ce qui serait advenu sans l’accord républicains/démocrates (reconduction des baisses de cotisations sociales

et des aides aux chômeurs) mais ce n’est pas tout à fait négligeable; il faudra d’ailleurs bien surveiller la suite des débats

car la reconduction ne va pour le moment que jusqu‘à fin février.

b) La reprise du marché immobilier sera freinée par la persistance de surcapacités (probablement autour de 1,2 million de logements)

c) Le désendettement des ménages, amorcé il y a plus de 4 ans, n’est pas terminé.


Par ailleurs, la récession de la Zone Euro est enclenchée et ne sera pas négligeable pour de nombreux pays ou zones; les exportations

vers la zone représentent ainsi, en pourcentage du PIB, 5% en Chine et au Mexique, 10% en Russie, 8% au Royaume-

Uni, près de 20% en Pologne et en Suisse,…

FRANCE

Jean-Pierre Petit,

Economist, President - Les Cahiers verts de l’économie

Le retour d’un stress systémique en Zone Euro est également loin d’être écarté. Malgré certaines avancées, la détente actuelle

s’explique principalement par la politique très accommodante de la BCE et la correction auto-réalisante des anticipations des

marchés. Mais les problèmes de fond sont loin d’être réglés (écart de compétitivité, manque d’intégration budgétaire, politiques

pro-cycliques). Le stress souverain pourrait revenir en cas d’échec de l’accord de restructuration volontaire de la dette grecque,

qui se diffuserait au Portugal, ou de récession plus importante qu’anticipée en Espagne ou en Italie.

Enfin, les évènements d’Iran (près de 5% de la production mondiale de pétrole) génèrent des risques potentiels très sensibles

en termes de prix d’équilibre du baril.

En Europe, la question-clé sera celle de la qualité de la gouvernance publique et son adaptabilité aux déséquilibres européens

(coexistence entre zones déficitaires et zones excédentaires) et, plus généralement, aux défis du vieillissement et de l’extension

de la globalisation.

Pour la France, la problématique principale sera d’inverser son modèle d’économie administrée, sous-compétitive et corporatiste

pour l’adapter aux exigences de la gouvernance allemande de l’Europe et de la mondialisation en général.

La principale transformation économique réelle des 5 prochaines années sera la montée en gamme de l’industrie chinoise.

Il y a plusieurs facteurs favorables au développement des M&A en France (M&A/capi faible, valorisation et perspectives de rentabilité

élevées dans certains secteurs,...) mais il y aura aussi des obstacles (endettement, cycle macro médiocre,…).

04


GERMANY

Jack Artman,

Senior Director/Head of M&A

at Infineon Technologies AG

What are your overall thoughts on this situation

Generally, I agree with the statement above. But if I focus on the semiconductor sector, it is not for the reasons you mention. For

Infineon, the European market is not that vibrant because of the under scale representation of semiconductors here. However,

we still have a lot of things to work on, e.g. on the topic of the European Union and Euro. These are challenges which will not

disappear short term. They are going to be readdressed at least in the mid-term period with each subsequent country coming

into our picture.

In your view, what significant changes or economic trends will we see in the world / in your country / region over the

next five years

We will spend a lot of time in the next five years dealing with the topic of the Euro and the European Union. I think that many

companies are going to be also taking some time to read on the consultant papers on what will happen to the Euro. Obviously,

Europe is very much export oriented. The relevant question in this context is: How much of the external trade is taking place outside

of European continent and within it Since a lot of cash flows are coming from outside Europe, the issues with the different

currencies are being dealt with anyway. I think that programs will only be affected where the European Union works as a whole,

which is not applicable for all of our product groups.

I think in the five year midterm there won’t be any drastic changes to business models of the companies in Europe. However,

from the longer term perspective, there is a sort of consolidation and deconsolidation taking place where both suppliers and the

customers are taking a look at the entire value chain and determining where they want to end up on that supplier chain.

The best example for a very good consolidation is the mobile communication industry. Some fights are still going on regarding

what the future form and type of mobile device, but most of that war is going on in very few hands.

Other sectors only seem concentrated already (e.g. automotive suppliers) while others are still considered deconsolidated, like

power, for example.

05

Which micro-economic areas or sectors will be the most productive over the next few years

In the semiconductor industry, we have a trend towards power management, safety and security. Of these three, power management

and security are the biggest issues going forward. As more things become programmable, they pose a bigger risk

for hacking, ranging from credit cards to big capacitors storing energy in the grid power. Further, for power management the

problems resulting from the lack of oil and volatility of oil prices are discussed by everybody and result in a general shift to renewable

energy. We had some government initiatives on renewable energy, determining the priorities and how energy comes into

the grid. Introducing renewable energy can result in certain spikes which are not wished, determining how often the generators

of the utilities have to start up at full force or be driven down. This together with the shift to electric powered vehicles drives the

demand for semiconductors in the next years. Semiconductors are therefore key for power management, not only power form

and size but also power distribution, accessibility and storage.


How do you see the M&A market in your country Cross-border M&A with partner countries

Europe-wide, there are only three large semiconductor manufacturers. Given that, M&A potential for deals of significance is

somewhat limited within Europe. On country level, it is even worse with us being the only large semiconductor company in Germany.

Unless there is a shift with ‘captive’ semiconductor activities and on how they structure their value change, the chance of

something happening in M&A in Germany is basically nil.

It is even more problematic/exacerbated, with an under-scale industry representation; you do not develop the technical clusters

like it is the case in the Silicon Valley, for example. Germany has a good engineering cluster in general, but there has to be a

group of several firms within an industry though which workers can freely shift, exchanging knowledge and supporting university

infrastructure that can promise students jobs. Accordingly, we only have very limited start up activities.

Therefore, the outlook for semiconductors was and is always cross border. And the two main markets will continue to be the

US and China. The first because it is the biggest market in terms of companies. China, the latter, because it presents the largest

end-market opportunity.

What about other BRIC countries

India is a good place for software development, but we question whether they have the infrastructure to sustain physical investments

by us. However, India is a very good source of IP. All in all, China is the hotspot for everyone in the semiconductor industry.

GERMANY

Jack Artman,

Senior Director/Head of M&A

at Infineon Technologies AG

How do you see 2012 for Infineon

We and most of our semiconductor colleagues have forecast some reductions in forecasts and have all indicated a relatively

flattish year. It won’t be negative, but no one is yelling that it’s widely positive. So it’s somehow flat but still coming out of the

uncertainties unleashed from 2009.

What is nice to see that you have a fair number of firms that have restructured and tend to be pretty efficient now. What we see

is a seller’s market - those public acquisitions that have been announced have seen premiums of 50% to 120%. That’s a lot and

implies that many companies feel undervalued currently, when the premiums split from the valuations. Maybe in 2012 this will

normalize and we will see the return of more normal premiums and a better buyer’s market.

06


INDIA

Karan Bhagat,

CEO, IIFL Private Wealth Management

What are your overall thoughts on this situation

The contrast between the western or developed economies and the emerging economies actually kick started post the 2008

financial meltdown itself and has grown over time. This clearly gets reflected in the current scenario. While the Western world is

trying to stay afloat the emerging economies were trying to cool of their high growth and equally high inflation. North America

has been showing some signs of improvement or should we say some green shoots are visible in its economy. It’s still too

premature to start believing it’s out of the woods and back to a slow, but constant growth path. The consumption which drives

it has not been very consistent. It’s only visible in parts. There has to be a phase of steady consumption and spending growth

to conclude that growth is back. For Europe it is a real tough time and maybe more to come in future. It’s struggling from every

corner possible. Too many of its member nations are on life support. To my thinking the safest way to save these struggling

economies within the European Union is through a bailout, for the time being. Any sovereign default can leave us with a lot of

unknown repercussions. The contagion effect could further hit the global economies. Some may still argue that pumping money

is inflating asset prices, to which I would still say that for these economies to stay afloat we need to give more time and make

sure that they tighten themselves as well. Until such time you have to make sure the asset prices don’t crack. It’s a known risk

that would be taken rather than something unknown because of defaults.

What are the specific problems and issues facing your country / region

For our region the two main issues especially in the case of India and China were overheating in the growth and high inflation.

The two central banks did struggle to get the inflation under control initially. But with constant rate increases they have managed

to do so. This has resulted in the growth slowing down significantly and brought us to the debate whether there will be a hard

landing or not. In the case of India there were some more structural issues like absence of government policies, no reforms, high

interest rates hitting the corporate growth and slowing the capex plans. The rupee also played spoil sport, consistent high oil

prices, ballooning current a/c and fiscal deficit, less inflow of foreign capital and investments. To sum it up Indian economy was

fighting against too many negative factors. This resulted in slower growth rate in turn.

07

In your view, what significant changes or economic trends will we see in the world / in your country / region over the

next five years

Globally, USA will clearly play the biggest role in reviving the global economy. The way things are moving I feel it should be

back on steady growth path over the next five years. Europe would continue to be a dampener. I don’t foresee it getting back to

consistent growth path in the near future. The dominance will shift to Asia. If US will be the biggest consumer then Asia will be

the growth engine and help in filling the gap created by the European Union.

In India clearly the onus lies with the government. It’s more of the governments inactions that has hurt the economy than any

of the global factors. Some amounts of policy actions are visible and the desperation is also seen within the government circle

to move ahead with reforms. I would clearly believe that this log-jam within the government has played itself off. We would surely

see a lot more action on their part going forward. We are already seeing the inflation coming off and the interest rate cycle

peeking. With the softening of the interest rates both the consumption and capital spending will be back. The Indian corporate

has the capability of bouncing back from the most difficult situations. Over the next five years we would be able to get back to

economic growth of 8-9%. This in turn will help the corporate growth.


Which micro-economic areas or sectors will be the most productive over the next few years

With the Government moving ahead with its reforms and policies as well as reversal in the interest rate cycle, I would say the

most beaten down sectors such as Infrastructure and Power should clearly do very well. These sectors are required to do well

in order to achieve the required high GDP growth. It also provides for a better platform within India to carry on other businesses

smoothly. Another sector that should do well is banking. That’s always the fuel for any economic growth.

How do you see the M&A market in your country Cross-border M&A with partner countries

Consolidation will happen in extremely fragmented sectors where profits are low due to excess competition, which is forcing the

weaker players to sell out or exit (e.g. airlines today and cement three years ago, the recent 2g verdict on telecom companies).

Consolidation will also happen in sectors where scale of economies are extremely important (e.g. generic pharma globally).»

Mergers and acquisitions improve pricing power and cuts cost while improving efficiency. In a country like India where you need

to have better pricing power to tap the huge demographic population, mergers and acquisitions are crucial. Other sectors which

can see increase in M&A activities are sectors like IT, Pharma, Media & Entertainment and Banking.

INDIA

Karan Bhagat,

CEO, IIFL Private Wealth Management

Also new-generation industries see a lot of M&A activities, the primary reason being a lot companies enter the sectors to tap

opportunities arising from newer markets. (Eg – low cost airlines - it saw the entry of several new players who wanted to tap the

opportunity, it only creates excess capacity, which then have to be rectified through M&A activities).

On cross border M&A, a large number of Indian companies have underleveraged balance sheets and the confidence to operate

outside India. However proper due diligence should be done so that overvalued acquisitions are not done which can strain their

balance sheets. The good part is increasing number of deals are available in the global markets which is a positive sign for Indian

companies as these deals are relatively cheaper than the valuations which prevailed prior to the global crisis.

08


ITALY

Andrea Andorno,

Vice-President Finance, Alitalia

What are your overall thoughts on this situation

Qualitative easing programs appear to be the best answer to the liquidity threat the European banking system has been facing

since the end of 2011. A tighter policy on liquidity would risk to push even further down the Western Europe economy which

remains a pillar of world economy regardless of the current crisis. The European Central Bank is able to support or to show it

will support the Union despite the potential downside of such a policy. The stronger the role of the ECB, also by an open easing

policy, the more effective the tools to counterbalance such policy (uncertainty and delay in a reaction would be far worse than

asset values inflation triggering even more speculation).

What are the specific problems and issues facing your country / region

Unfortunately the Euro itself has been showing to be an unexpected indicator that the European Union is far ahead from being

truly united when it comes to fiscal policy. European Union political success is now more than ever linked to the Euro overcoming

its worst crisis since it was created. I think that since no major European country has walked away from the project and there are

enough resources available in the region, Western Europe will slowly gain back worldwide investors’ confidence.

In your view, what significant changes or economic trends will we see in the world / in your country / region over the

next five years

Italy’s downgrading from rating agencies following the strong increase of its Italian 10 year bond yields have caused a very important

reaction in the country. A new technical government strongly focused on overcoming the crisis and promoting reforms

has been appointed in order to address what has become a not deferrable priority (very important step). The next 12-18 months

will be very critical because, while cutting public spending/increasing tax pressure, further measures will have to be found in

order to have the Italian economy exit from recession. After the first critical months mentioned above, in the following years it is

foreseeable to have an increase in Italy’s competiveness, due to the positive effects of the reforms aimed at reaching a higher

productivity and full alignment with major European peers.

09


SPAIN

Juan Iranzo,

Dean of the Madrid College of Economists and Vice-President

of the Instituto de Estudios Económicos

Quels sont les problèmes spécifiques que doit affronter l’Espagne

L’Espagne a un problème fondamental de compétitivité qui diminue sa capacité de croissance. De plus, l’Espagne est dans

une situation de surendettement de ses ménages, des entreprises et du secteur public qui limite la capacité de croissance de

la demande interne, c’est-à-dire, la consommation, l’investissement privé ou public. Enfin, bien qu’ils aient baissé récemment,

l’absence de confiance, accentuée par un très fort taux de chômage, engendre des coûts de financement aujourd’hui encore

trop élevés.

Quels changements ou tendances économiques allons-nous observer en Espagne ou en Europe au cours des prochaines

années

Deux scenarios sont possibles: si l’Espagne améliore sa compétitivité grâce à des réformes structurelles, le pays réussira à profiter

des opportunités qu’offre une économie globalisée représentées par des pays comme ceux d’Amérique Latine, dans le cas

de l’Espagne, mais aussi l’Inde, la Chine, l’Indonésie, la Turquie et certains pays d’Europe de l’Est.

Si l’Espagne n’améliore pas sa compétitivité, elle perdra son potentiel de croissance, entrera dans une phase de stagnation et

verra sa présence au niveau international diminuer.

Quels secteurs peuvent échapper à la crise dans les prochaines années

Ce n’est pas tant une question de secteurs qu’une question d’entreprises et de projection à l’extérieur, aussi bien via des investissements

directs à l’étranger ou via la demande externe et l’exportation. Par exemple, certaines entreprises du secteur

touristique, automobile, chimique ou agroalimentaire peuvent sortir de la crise renforcées.

Quelles sont, selon vous, les perspectives du marché des fusions et acquisitions dans votre pays, et en particulier celui

des fusions et acquisitions transnationales

L’Espagne, comme ses pays voisins, souffre d’une restriction du crédit qui affecte les fusions et acquisitions. Cependant, il serait

souhaitable que ces processus s’accélèrent tant le tissu des entreprises espagnoles est atomisé, ce qui représente aussi un

fardeau pour la compétitivité du pays.

10


THE NETHERLANDS

Dick Verbeek,

President and member of the board of several

international financial services firms

What are your overall thoughts on this situation

In my opinion 2012 has a better outlook, than people tend to think. Everybody is now aware that there is a problem, which is part

of the solution. Times remain, however, challenging, everybody knows this and is as such working hard to find solutions. In many

countries - among which Italy, Portugal and Ireland - measures are being taken. As such, overall I have a more positive mindset

about the year 2012 than I had about the years before.

What are the specific problems and issues facing your country / region

Although we are still one of the better performing countries in this financial crisis, especially in Europe, medium-term adjustments

are required in the employment conditions. Pension costs are rising rapidly, forcing our country to take difficult and politically

challenging adjustments. In addition to that there appears to be mismatch between the level and skill of education and to the

other side the requirements of employment market, for example in engineering. However, overall The Netherlands are less impacted

by financial crisis and continue to be a very international driven and competitive economy.

In your view, what significant changes or economic trends will we see in the world / in your country / region over the

next five years

The contribution of emerging markets such as India, China, Brazil and Russia will continue to increase in size and importance.

Many Dutch companies are already very international and therefore should be able to benefit from this. The open character of the

Dutch economy is fit to make adjustments in this aspect. As stated above, The Netherlands should focus on the labour market

in order to remain competitive. In that sense a liberalization of this labour market is key for a sustainable economic performance

of our economy.

Which micro-economic areas or sectors will be the most productive over the next few years

The Netherlands will continue to have a strong position in the sectors agriculture, food, energy-related (natural, gas, trading and

off-shore construction) and logistics (although increasingly under pressure). In this respect The Netherlands - although being a

mid-size economy in Europe - has many leading international companies active around the world.

Last but not least, the financial services sector, currently involved in many changes/developments, will remain to be substantial

and a driving engine for the Dutch economy.

How do you see the M&A market in your country Cross-border M&A with partner countries

I have a positive view on this! In view of the limited economic growth expected in The Netherlands, M&A will be a key factor for

achieving growth. Since many of the Dutch companies have a healthy balance sheet, they should be able to play an active role

here in. Not only on local level, but especially in cross-border deals increased action could be expected.

11


UNITED KINGDOM

Michael Ward,

Director of Trade and Investment, UK Trade & Investment

What are your overall thoughts on this situation

The key issue is what we do about the challenge of lower growth in Europe and stronger performance in most emerging markets.

At one level the answer is simple: find new ways to grow developed economies. In the UK it is clear we need to tackle a chronic

trade deficit which has been a brake on growth for a generation. This is a job which will take several years. If consumer spending

will not drive growth then we must turn to international trade and investment. In the UK 20% of SMEs export yet the European

average is 25%. Getting substantially more companies into exporting is crucial. This is achievable with the right mix of support,

capacity building and help from government agencies like UKTI with help from finance and business service providers. Specifically

we propose to double the number of companies we help to 50,000 by 2015. There is also a job to be done with mid caps,

often family owned and sitting on cash which could be mobilized into investing in internationalizing their business. Similarly we

have to maintain the upward trend of Foreign Direct Investment (“FDI”) projects coming to the UK, which continues to be the

most attractive destination for FDI and associated jobs in Europe.

The second question is where do we look for opportunities The bulk of export opportunities for companies in the UK and Europe

are in Europe. Around three quarters of UK companies exporting for the first time look first at markets close to home. Europe and

the US are by far the largest source of FDI for the UK. But of course the opportunity is growing faster in higher growth markets. So

our challenge as a government export and investment promotion organization, hit by spending cuts as part of essential budget

deficit reduction, is getting the right balance between an increased effort in high growth markets and the right level of support

for exporters and investors in developed markets. We are shifting some resource to new markets and learning to work smarter,

including with private sector partners, in developed ones. There is no doubt that we need to improve our trade performance in

both developed and high growth markets.

It is too easy to be mesmerized by macro-economic gloom. There are new opportunities. Bilateral trade in goods between the

UK and France increased by an estimated 10% in 2011. FDI projects into the UK also increased. So there is some good news

and we intend to persevere in the search for new growth.

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What are the specific problems and issues facing your country / region

A year ago the UK government set out a frank assessment of the challenges we face in a White Paper on Trade and Investment

for Growth (http://www.bis.gov.uk/assets/biscore/international-trade-investment-and-development/docs/t/11-717-trade-investment-for-growth.pdf).

These include concerns about skills shortages in engineering particularly, the complexity of the tax system,

access to finance, restrictions on migration and planning rules. This has brought about a significant shift in how government

approaches the needs and resolves problems raised by investors: better co-ordination on policy and practical issues; better

strategic relationship management of key investors; ministers leading more trade missions and so on. There is still much more to

do but there is progress and the direction of travel is clear.


UNITED KINGDOM

Michael Ward,

Director of Trade and Investment, UK Trade & Investment

In your view, what significant changes or economic trends will we see in the world / your country / region over the next

five years

I would point to two slightly contradictory trends which will influence the investment climate in developed markets:

• The UK’s analysis that future growth will need to come from attracting more FDI and international trade is shared by many

countries. So we are already seeing intensifying competition among countries to convince foreign investors of the attractiveness

of their business environment. That is playing into a wide range of fiscal and regulatory policies – e.g. planning R&D

tax breaks, lowering corporate taxes and so on – which the UK is doing too of course. Watch out too for more visible efforts

to tackle high costs of production. Germany’s relative success in the Eurozone over the last decade will spur on others. The

UK already has lower labour costs than its main European competitors and has a pipeline of measures to cut red tape, make

planning decisions more efficient, finance technology and innovation and stimulate investment in smaller firms.

• Stronger political challenge to open markets in the form of favouring local manufactured content, reciprocity, repatriating jobs.

This is already a significant debate which promises to be divisive. We will want to do all we can to remove any barriers to high

quality investment into the UK and Europe and prevent new ones being erected.

Which micro-economic areas or sectors will be the most productive over the next few years

We are active across most sectors but the areas we see as most promising for internationally mobile investment over the next

couple of years at least in the UK are the digital economy and software, clean tech and energy infrastructure, some areas of

aerospace and automotive - and high end advanced engineering more generally - and innovative business services.

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