The euro, the European Union’s boldest and most ambitious project, is under threat. Divisions among Europe’s leaders, and their inability to stabilise the euro, have damaged the EU’s reputation on other continents. The good news is that the EU now has an emerging leader.
Germany's economy has been winning numerous plaudits of late. It is not hard to see why. Previously much-vaunted economies "Ireland, Spain, the UK and the US, to name just four" lived way beyond their means for far too long.
David Cameron has won his first European victory. At this week's EU summit in Brussels, he seemingly persuaded a dozen other European leaders to back his demand to limit to 2.9% next year's EU spending increase. Britain's eurosceptics wanted a freeze or a reduction.
Recently I attended an off-the-record Brussels “think-in” where a very prominent European politician wondered out loud what the future would be for the EU now that his children’s generation were taking the reins.
A small number of sovereign investors, sometimes originating from non-democratic states, are buying shares in European aerospace and defense companies. Some EU governments have responded by calling for tougher controls on foreign investment in these industries.
The European Commission announced proposals for reform of eurozone governance on Wednesday, calling for closer monitoring of member states’ public finances and tougher penalties for alleged fiscal ill-discipline.
A recent European Union meeting to review blueprints for better management of the euro got overshadowed by a noisy row over France’s decision to send scores of Roma – or gypsies – back to Bulgaria and Romania.
The euro crisis will be with us for many years. The underlying causes, such as southern Europe's lack of competitiveness, cannot be remedied overnight; Greece, Italy, Portugal and Spain face years of low growth, severe curbs on public spending and perhaps social unrest.
"C’est bien là la cause de toutes les difficultés qu’auront ensuite la Grande-Bretagne et l’Europe à accorder leurs violons", estime Simon Tilford, chef économiste du CER, basé à Londres.
"The impact on growth from changes in the minimum wage comes down to the level at which it is set," said Simon Tilford, chief economist at the CER in London
Simon Tilford of the CER claims the two sides will struggle to open their markets fully to each other’s farm produce. "When they get down to the nitty-gritty, it’s possible that the negotiations will founder on some of the cultural differences between the EU and the US over things such as genetically modified food," says Tilford.
"A referendum looks almost inevitable now but the timeframe is uncertain," says Katinka Barysch, deputy director of the CER in London. She says the debate is already having a negative economic impact: Investors are getting nervous.
“Politics is one of the black swans of the eurozone this year. In Italy we could have political uncertainty, perhaps the return of Silvio Berlusconi. In Spain, we don’t know where the current scandal surrounding the prime minister will go", said Philip Whyte, of the CER
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