Europe's Second Pandemic
Retrieved from https://www.libdems.org.uk/europe-day-2020
Markus Formel / November 13 2020
(5 min. read)
Europe has a problem. The sickness of political unwillingness to reform, even slightly, has put us on our deathbed. The indebtedness of large European economies, with the largest political leverage - France, Italy, Spain, has combined dangerously with a wide dislike for reforms. Europe needs to solve this on the local level and the European level, or it will perish. European unwillingness to change was demonstrated long before the Corona-crisis. When the UK had voted to leave the EU, then head of the EC Jean-Claude Junker has said that there are 4 possibilities for Europe. Had something, changed? No, Europe has rolled over and kept living on continuous financial stimuli, kindly provided by the ECB. Back then, in 2016, the world was a bit simpler. China had not yet tried to “assimilate” Hong Kong to the mainland. The peak of the migration crisis was a year old. Hungary and Poland were still considered as democracies. And still. Europe did not manage to any reform. With this historical precedent, it is hard to image the reform years, which are to come. With massive, 750 billion euro-stimulus packages for the European nations to help cope them with the aftermath of the pandemic, we are still yet to see, what the reform plan will look like. But one thing is certain, and that is the number of deficits. And the debts will need to be repaid.
“The United States has Silicon Valley, China has Shenzhen, India has Bangalore and in Europe, well, it’s complicated. ”
France and Spain are peaking at 115% and Italy has a debt to GDP ratio of nearly 140 per cent. Reforms are much needed. It is necessary to point out that these counties rank poorly in the Economic Freedom Index and the highest position among them is 30 on the Ease of Doing Business Index. Looking at the recent historical undertakings in those countries, one might seriously question their abilities. L ́ enfant doré of Europe - Emmanuel Macron has been one of the most active to reform France. Formerly from the Socialist Party, serving as a minister during the quinquennat of Francois Holland and having a comfortable majority with the economically liberal - or at least reform-minded - ministers, he was supposed to get France from the mud of la France Profonde to the glass, steel and modernity of the 21st century. Large structural attempts to reform France were left buried, after almost two years, under the blanket of the pandemic, peacefully hibernating. I need not mention Spain or Italy - with Spain, the Catalan independence movement was in full motion and Italy was troubled with political turbulences and electing a wave of populists.
Source: Eurostat
The United States has Silicon Valley, China has Shenzhen, India has Bangalore and in Europe, well, it's complicated. Europe is un-opened for business (and not because of the pandemic) - only one country in the EU is considered economically free - and that is Ireland. Among the top twenty-six free economies, none of the top EU players is present. As for the others - Netherlands and Finland are known as frugal, Lithuanian and Estonia as small competitive Baltic economies, Denmark being stable free-market heaven, with a large welfare state. And Luxembourg, a liberal hub for finance and everything tax-related. The implications of unfree economies are not to be underestimated. With the current geopolitical climate, emerging economies and demographic shift will result in a life or death fight for skilled labour and strategical information technology. And Europe needs to get this one right. China is projected to surpass The United States as the biggest economy in 2024. The two biggest European economies - that of Germany and France, are set to decline to be the 7th and 10th largest ones, respectively. Although this might be seen as a slight difference, together with their ageing population and their welfare state ambitions, they have concocted a dangerous cocktail, one which currently nobody is seen to be in a motion to naturalise.
The dangers of European irrelevance in the contemporary world will only keep coming. The UK leaving the EU, with an ambition to reestablish its foot in the post-Brexit relations, having historical experience with free trade and with contacts comparable to yellow pages of its former colonies - entrenched in the Commonwealth, it will be another power with a grand dislike for euro-regulation in close geographic proximity to Europe. New trade deals from the middle east with newly established diplomatic ties, China being present in the creation of new African tigers, which are themselves establishing new trade relations, Marcosour countries slowly liberalising trade and growing, South-East Asia is one of the most dynamic regions in the world, and a rising of Indian nationalism and ambition to beat China. Europe needs to open itself to this new reality, it is no longer leading in the marathon. Europe has taken a long break with the possibility, that it will never recover its historic lead.
L ́ enfant doré of Europe - Emmanuel Macron
Source:https://guardian.ng/news/french-debates-rally-macrons-supporters-but-rebels-hold-out/
Having a large regulatory burden, hefty taxes and employment agreements comparable to marriage Europe is not a place to go to even set up a café, and certainly not a next century start-up, which is going to revolutionise the way we live. With degout to reform, substantial debt and foreign powers knocking on the world ́s economics doors it is important for the future of Europe, with the current geopolitical climate to again become the economic beam as it once was.
