Political nightmares are haunting the EU

Political nightmares are haunting the EU

Six years after the financial crisis, most economic analysts are cautiously optimistic about the growth prospects of the European Union. Financial markets have already factored in this change of mood despite the fact that unemployment remains stubbornly high in many countries.

But this mild optimism could easily evaporate if political developments take the turn that some analysts are predicting. There is certainly no feel-good factor among most ordinary people in the EU. They blame politicians, the banks, and big business for the longest economic recession in the past 50 years.

While the role of politicians in the real economy has declined in importance since Western economies embraced trade globalisation, many feel that EU leaders are not doing enough to stimulate employment and business growth. Six years of austerity has sapped the energy of most people, especially the young unemployed and older workers who were made redundant because their employers had to restructure their businesses to survive.

The mood of those worst hit by the economic slump of the last six years is graphically described by an Italian Gucci sales assistant quoted by the Financial Times. Launching a rant on Italy’s politicians, he blames them for “fighting among themselves like little children and ignoring our problems”.

Italy, in fact, poses the biggest risk to the eurozone’s recovery in 2014 because of its dysfunctional political system. It seems that both major political parties in Italy are keen to have a general election in May, even if they are not admitting it in public as they do not want to be seen as the ones that will bring to an end the left-right coalition of Enrico Letta.

The new Partito Democratico leader, Matteo Renzi, is more capable of criticising his colleagues in the party and in government than of coming up with viable plans on how to restore economic growth. His sarcastic comments about his colleagues are not the stuff that true leaders are made of. So an election in May could leave Italy once again with a hung Parliament, especially as the protest party Movimento 5 Stelle led by a former comedian is likely to hold the balance of power in the next Parliament.

The situation in France is not much better than that in Italy. François Hollande is making headline news in the media for the wrong reasons. He betrayed the trust of millions of French people when he promised to steer France away from the flamboyant style of governance of former president Sarkozy but ended up stagnating the economy by failing to undertake the economic reforms that the country needs.

Italy poses the biggest risk to the eurozone’s recovery in 2014 because of its dysfunctional political system

His colourful private life will surely not hide his ineptitude to lead his country to economic growth and lower unemployment. Many are predicting that the extreme right may well hold the balance of power in the French Parliament in a few years time.

Greek politics are arguably posing the most dramatic risk for the EU. While Greece assumed the half-yearly rotating presidency in January, EU leaders praised Athens for the progress it made in controlling its public deficit problems.

Greece’s public budget is now in primary surplus, but the economy has lost a quarter of its output since 2007 with the consequent distress that this has brought to thousands of workers.

Once again, the Greeks vented their frustration against their current political leaders by supporting Syriza, a radical left-wing alliance that according to opinion polls at present is the biggest party in Greece.

Members of the once powerful socialist party, Pasok, are defecting to Syriza that is threatening not to honour the agreements signed with creditors who rescued Greece from bankruptcy a few years ago.

The UK has its own political risks. The Liberal-Conservative coalition is creaking as general election to be held in May 2015 approaches.

The British economy is doing relatively well but the eternal anti-Europe obsession of many Britons is stoking support for UKIP, another right-wing party that thrives on xenophobia and EU bashing.

The British Labour Party leader has so far failed to win the endorsement of disgruntled voters who would normally look for a change after a few years of imposed austerity and trimming of the welfare state benefits.

So it will not come as a surprise if even in the UK we will have another weak Parliament with no single party commanding a workable majority.

Europe is indeed haunted by political nightmares.


Comments not loading? We recommend using Google Chrome or Mozilla Firefox with javascript turned on.
Comments powered by Disqus