E-Paper
Bleak forecast for the EU
Euro-scepticism, especially among the larger nations, is shaking the base of the whole edifice
The European Union’s latest unemployment figures show that the so-called Euro-crisis has yet to reach bottom. This record is likely to be broken in the next quarter as jobless rates are likely to break more records in the months ahead. The standard deviation among Eurozone countries when it comes to unemployment is striking: less than 6% in Germany and northern Europe and in the 25% range for countries like Spain and Greece. None of this is unexpected. The austerity programmes of the most-indebted countries will continue to push down growth figures. The more competitive economies struggle with dampened demand inside Europe and in the world larger markets like the United States and Japan.
What should trouble the European Union is the surge in Euro-scepticism across the continent. Surveys by the Pew Center and the European Council for Foreign Relations all show an enormous erosion of faith in Brussels among Europeans, especially among the citizens of its largest countries. What was a British quirk is now matched by disillusionment in France, Italy, Spain and Germany. But talk of a Eurozone break up or a general EU dissolution is an exaggeration. Interestingly, though unemployment is a strong concern for the people and they all want their respective governments to create more job opportunities, only very few support more government spending to boost the economy. And here lies the catch: as long as governments continue to cut on spending, the morale of businesses and consumers will remain low, thus further pushing the probability of any meaningful recovery. Whatever angst there may exist between Europeans and their political leaders, it is not translating into Euro-sceptical political platforms. Only the United Kingdom Independence Party has risen from this ideological wasteland with some additional support — but no mainstream party has seriously taken up an exit policy for any European Union member.
The original policy contract that underlay the European Union — an agreement further deepened by those who adopted the euro — was that Brussels would handle regulations and standards while the national capitals would handle the issues that affected voter sentiment — welfare payments or labour laws. But this was a marriage made in fantasy. It has been unravelling since the global financial crisis took place. The outlines of what might replace it are evident: more centralised control of national budgets in return for an enhanced European Central Bank with more financial search-and-rescue capabilities. This is all for the good. But it will mean a twin-track Europe, half in recession and political turmoil and half not, for some years to come.
