Greece could still have a role in a multi-speed Europe

As said over and over, and over again since 2012, look for a multi-bloc Europe. This is the most sensible outcome to the mess and a newly formed United States of Europe is around the corner after the EU turmoil. This is why you will see increased calls for further integration and unification, regardless of the turmoil. In Europe all roads lead to Berlin’s Fourth Reich dominating the continent through it’s Troika.

 

It’s not more political union the EU needs to survive, but more economic success – and some common sense

Sometimes it is easier to see what will happen in three or four years’ time than what will happen in three or four days. And so it is with Greece. One of the things that many of us will have found distressing, alongside the hardships heaped on the Greek people, has been the tone of the debate between the country and the EU’s dominant economy, Germany: fury on the one hand, and something close to contempt on the other. This is not the ever closer union envisaged by the founders of the EU and enshrined in the Treaty of Rome. Ironically the key device designed to pull Europe even closer together, the euro, is driving it apart.

But an ever closer union was at some stage always going to be transformed into some sort of multi-speed Europe,  with the members wanting to integrate further doing so, while those that didn’t staying put, or retreating a bit. That is where Britain is now, and the elections in Denmark last week point the same way. The governments of Finland and Sweden also face push-back from their electorates, though there is no question of Finland dropping the euro.

It is a harsh truth that EU members of the eurozone have grown substantially more slowly since its inception than EU countries outside it. That is not straightforward cause and effect; there are other reasons, such as demography, to help explain this. Greece might appear an extreme case, for after a mid-2000s surge its real GDP is back to the level of 2002. As is Italy’s, more or less. For much of the eurozone it has been a lost decade, or worse.

Some argue that for the EU to survive it must have more political union. I would argue that it must have more economic success.

A new paper from McKinsey Global Institute, “A Window of Opportunity for Europe”, suggests how the EU could lift its game. Without reform it calculates its economy will grow at 0 to 1 per cent a year, up to 2025. That is a dismal prospect – for if some countries grow faster than that, it suggests others will not grow at all, or worse. It would be another lost decade. Yet the convergence of low oil prices, a competitive euro exchange rate and the continuing impact of QE, ought to create an environment where Europe could do better.

Much of this is common sense. Some EU countries, ourselves included, have managed to get a high proportion of people into the workforce. Our employment rate, of 73.5 per cent of working-age people, is the highest since comparable records began in 1971. We have a million people of more than the official working age in jobs, and since we still have a youth unemployment problem it should be possible to push participation up yet further. The task is for the laggard countries to push through the reforms done by the frontier ones.

With faster growth, even Greece’s problems would become more manageable. If a multi-speed political Europe is a faster-speed economic Europe, what’s wrong with that?

Full article: Greece could still have a role in a multi-speed Europe (The Independent)

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