|WORLD | BUSINESS|
A Europe Without a Future
|Vladimir NESTEROV | 29.12.2013 | 00:00|
In summer of this year high spirits prevailed in Brussels. When Eurostat published its statistical report for the second quarter, it turned out that the economy of the Eurozone, despite the pessimistic expectations of experts, had grown. Not at all significantly, of course - by 0.3%, and that was mainly from a certain amount of economic recovery in Germany and France. The growth of the largest economies of Europe equaled 0.7% and 0.5% respectively, in annual terms. It was predicted that Germany's GDP would increase by another 0.5% by the end of the year. Of course, the GDP of the Eurozone, pulled down by the «problem countries» of southern Europe, will still go down by the same 0.5%
Anyway, European Council President Herman Van Rompuy hastened to announce that «the low point of the financial crisis in Europe has passed», and European Commission President Jose Manuel Barroso proclaimed that «the EU is transitioning from a crisis policy to a growth policy». And all this was happening while experts were saying that it's too early to start rejoicing about the «growth». For example, Guntram Wolff, director of the analytical center Bruegel, stated at that time, «Growth figures in all of Europe are still way too small to manage to turn around the situation on the job market. Unemployment rates will remain high in southern Europe next year as well. It is going to be a while before we'll see any relief there... I think public investments are especially important in Germany, which has one of the lowest public investment quotas in the EU. It is surprising that in a country where borrowing money comes so cheap investments are so low. In Germany in particular there are a couple of shortfalls when it comes to public infrastructure. In some regions like the Ruhr region it's obvious that public investments are lagging behind.»
However, neither Berlin nor Brussels has turned out to be prepared for such a turn of events. Of course, the ECB has tried to take some measures, for example, lowering the discount rate to 0.25%. However, Germany, which has the strongest economy in Europe, has not supported the ECB's initiative by increasing investments. Submitting to Berlin's will, other countries have done the same.
Seeing the financial policy of their governments, entrepreneurs also joined in the «cheap money» game. They started investing, but in real estate, not in the real sector. This happened in France, in Germany and in other countries.
A Sobering November
The summer optimism of Brussels officials had evaporated by late November. At the end of the third quarter, the Eurozone's economic growth turned out to be illusory - it was only 0.1% (!). That is, the crisis hasn't gone anywhere; it was only lying low in order to pop up again with new force. The third quarter refuted the commonly-held notion of a «two-speed Europe», according to which, while there is no growth in Southern Europe, there definitely is in the North. Nothing could be further from the truth; not a single country in the Eurozone can currently boast of significant growth. Even in Germany the growth of the GDP was ridiculously modest - 0.3%, or 1.3% in annual terms. And they may not even end up with this 1.3%. The fact of the matter is that in September production had already started to decline. And the fourth quarter started extremely poorly; in October Germany's industrial production volume was 1.2% lower than in September. Production in the processing industry went down by 1.1%, manufacturing of capital goods decreased by 3%, and manufacturing of durable consumer goods decreased by 4.5%.
«The German economy has not managed to make a good start to the fourth quarter. Businesses are still holding back with investment. This indicates a rather cautious outlook for investment activity in the coming months», said Commerzbank economist Ralph Solveen, commenting on recent events.
In the end, everything comes down to the reduced purchasing power in Europe and in the rest of the world brought about by the crisis. For the German economy, which is focused on exports, hard times have come. It is worth noting that at the November China-EU summit in Beijing, neither the Germans nor the other Europeans, who are accustomed to criticize the Chinese government for «human rights violations», said a single word on this topic. And this is understandable; whether or not the Germans like the way the Chinese do things, there is no other consumer of their products as large as China, and there is unlikely to be one.
Things are no better in the smaller countries of the Eurozone. Austria has managed to return to an insignificant amount of growth, 0.2%. The Netherlands compensated for a drop in the first half of the year, showing growth of 0.3%. Finland reached growth of 0.4%. There have been no noticeable changes for the better in «problem» Southern Europe, either. Growth in Spain is microscopic; Italy is not growing yet, and since the beginning of the crisis its GDP has shrunk by 25% (!). In Greece the decline is continuing as usual, albeit not as rapidly as before.
As for France, people there now believe that the «chronic patient» of Europe is no longer Greece, but their own country. A 0.1% reduction in the GDP caused a sort of national stress. After all, both Gaullist Nicolas Sarkozy and socialist Francois Hollande have continually reduced social expenses, raised existing taxes and introduced new ones. As a result, unemployment rose in the third quarter of this year; among young people, according to data for September, it has remained at the level of 25%.
Amid the economic problems in Europe, poverty is progressing rapidly. According to Eurostat sociologists, in 2012 124.5 million people were on the brink of poverty. The worst situation is in Bulgaria, where poverty and social isolation threaten half (!) of the population. Next after Bulgaria are Romania and Latvia, where 42% and 37% of residents are at risk of poverty, respectively. In Lithuania poverty threatens 33% of the population, in Poland 27.2%, and in Estonia 23.1%. Italy must be mentioned among such countries as well; although the percentage of poor people is not so large (29.2%), in absolute terms they come to 18.2 million people. The Italians make up the largest mass of poor people in Europe.
From Euroskepticism to Total Pessimism
The debt crisis which is already in its fifth year in Europe and the severe austerity measures which all European countries have had to introduce is causing a rise in Euroskepticism, not only on the periphery of Europe, but in relatively prosperous countries like Germany and Austria as well.
The results of a survey conducted in late August – early September 2013 by the French marketing firm IFOP show an abrupt increase in the number of Euroskeptics in the top four economies of the Eurozone: Germany, France, Italy and Spain. The main question they asked the Germans, French, Italians and Spaniards was whether they felt that membership in the European Union was advantageous to them. 37% of residents of the Pyrenees believe that membership in the EU only brings Spain problems (a year earlier 26% in Spain were Euroskeptics). In France the number of those who are dissatisfied with their country's membership in the European Union rose from 38% in 2012 to 43% at present. In Germany 44% of the population disapprove of membership in united Europe (a year ago 36% in Germany were Euroskeptics). The greatest number of Euroskeptics is in Italy, where 45% of citizens see no benefit in being part of the European Union...
Along with Euroskepticism, the souls of Old World residents are increasingly filled with pessimism. People are losing hope and faith in the future. According to data from the American Pew Research Center, which conducted a study on this topic in spring 2013, only 28% of Germans, 17% of the British, 14% of Italians and 9% of the French believe that their children will live better than previous generations. What is even more interesting is that pessimism in the West contrasts sharply with optimism in developing countries; 82% of the Chinese, 59% of Indians and 65% of Nigerians believe in a better future.
Obviously those experts who believe that Europe is losing its former leading position as the locomotive of progress are right. The time of other civilizations has come.