Two articles lead one to expect a new (or renewed) crisis in the EU. One in today’s US print edition of the Financial Times and the other in this week’s US print edition of the Economist.
In the FT’s, “The Spreading Pain of Italy’s Bank Saga“, Sarah Gibson explains how, beyond the shenanigans related to the letting-off of Italy by the EU for bailing out its unsound banks, Italy is headed for a risky referendum in the fall. It concerns government modernization but Prime Minister Renzi has turned it into a referendum on himself, by insisting that should the vote fail, he will resign.
The problem is that many firms have gone bust, taking with them bad loans written-off by banks, reducing their assets (and liabilities), and increasing unemployment. This tends to further harm already anemic economic growth. So Renzi is at risk since the electorate may very well vote, ‘no’ more as a statement against the current performance of the Italian economy, rather than a rational response to the proposal. The result would be turmoil in Italy and possibly the return of extremist policies that would then further threaten economic recovery and EU stability.
The Economist article, “Britain and Europe: The Start of the Break-Up” reports on how other nations view, in an Ipsos Mori poll, the UK’s recent decision to vote for Brexit. There were some interesting results.
More member states (58% over 55%) felt Brexit was worse for Euro zone than for Britain. This is indeed logical but hardly the stuff that the media wants to see. Only 35% of those polled in big developed countries outside the Union felt Britain had made a mistake. So what do they know that the press don’t?
Interestingly two other points stand out. Sweden, of all countries, is most concerned for Europe (68% polled said Brexit was bad for Europe). This is due to the economic impact of such a sizable economy leaving. Let’s be frank- the UK is not better than other country in the EU; it’s just a very big, free-trade oriented ex super-power with good connections. A fool would negotiate restrictive policy to trade and not collaborate with such a neighbor.
As issues such as Italy’s wobbly banks become more serious and risky referendums are executed, and as Britain’s economic future will be observed to be guided by their own decisions versus those from outside, other countries may soon conclude that the grass might be greener outside the EU….
Long live the EU. Let’s get on with building a new elective EU II Constitution!