- If taken at face value, the European Commission appears confident in its Brexit negotiating position. Yet the EU faces numerous existential challenges.
- Economic: An Italian sovereign default has increased in likelihood over the past year and the IMF still refuses to contribute to Greece’s bailout until debt relief is agreed.
- Unemployment: It is highly questionable as to whether high unemployment can be indefinitely sustained in weaker Euro economies. Over 60% of 16-34 year olds in Greece, Italy, Spain and France would be willing to join a large scale uprising against their governments.
- Fiscal Union: Moves to fiscal union are likely to be unpopular in donor countries and may in any case fail. Fiscal transfers in Italy over the past 60 years have failed to reduce the wealth gap between North and South.
- Immigration: The loss of control of Europe’s external border has caused increasing tensions, with the Visegrad group refusing refugee quotas. The EU has launched infringement proceedings against Hungry and President Macron has called for sanctions against Poland.
- Euroscepticism: Eurosceptism is spreading like wildfire across Europe. The man tipped to be next European President claims this poses an existential threat to the EU.
- A “no deal” scenario with Britain is likely to exacerbate the EU’s existential challenges, rather than reduce them.
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Disclaimer: The views set out in the ‘Economic Bulletin’ are those of the individual authors only and should not be taken to represent a corporate view of the Centre for Policy Studies.
Daniel Mahoney - Thursday 1st June 2017