Europe Is on the Verge of Collapsing: Seven Crisis that Are Killing the EU

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Analytical Group “Economist Intelligence Unit” (EIU) published a report recently titled “Europe is on the verge of colapsing”, which describes the seven key areas which are threatening the European Union in economic and political terms, and which could lead to the disintegration of the EU

Europe Is on the Verge of Collapsing: Seven Crisis that Are Killing the EU

Originally appeared at Tanjug, translated by A. Djurich/А. Ђурић exclusively for SouthFront

First on the list of problems that are indicated by “EIU”, which operates under the British newspaper “The Economist”, is the question of the membership of Great Britain in the EU, according to the Croatian “Index”.
If Great Britain votes for leaving the EU, it might open up economic and political turmoil, mainly short-term in nature, warns “EIU”.

Devaluation of the currency is expected, even before the referendum on independence, scheduled for Jun 23.

Voting for “brexit” would cause a new fall, fueled by possible costs associated with exit from the Union, according to the analysis.

Such a decision in the EU could cause a crisis of political legitimacy of EU and support for euro-sceptic parties within member states.

Another problem for the EU is the Greek debt crisis, “EIU” said and reminds that Greece agreed to tough conditions and savings in order to prove that it works on the reconstruction of the economy and thus inherently more secure financial assistance.

Still, the question is whether any government can implement the measures that are necessary for the third package of measures. Greek exit from the Euro-zone would mean a huge political failure of the block, with possible destabilizing consequences, this analytical group warns.

“EIU” further states the Union monetary policy as one of the problems. The Euro-zone has been stuck in a low inflation for too long which created the minimum economic progress, according to the study.

The option that is now on the table for consideration is the so-called “helicopter money”. The point is that, according to Nobel Prize winner Milton Friedman, deflation is causing a recession and a drop in credit activity, with an accompanying rise in unemployment, must be stopped, even by “throwing money to people from helicopters”.

However, even the last action of the President of the European Central Bank Mario Draghi, pumping fictional money into a European banking system, has not triggered the expected volume of Euro-zone economy, according to “EIU”.

The decline in productivity is one of the problems for the EU. Labour productivity in the EU has slowed since the global financial crisis and there is little probability that the five largest EU economies will recover the rate of productivity, which was there before the crisis.

In Spain and Italy, productivity has stagnated since 2014, and only a slight recovery is expected in Germany, France and the UK in the period from 2016 until 2020.

“EIU” further stated a tension between European Union and Russia.

The spread of Western influence in the post-Soviet space, Russia has seen as a possible threat, indicates “EIU”.

EU is poorly prepared for these issues, especially because of disagreements within the EU when it comes to the severity of these problems. The consensus on the introduction of economic sanctions has been made only after the shooting down of the passenger planes over eastern Ukraine. After that, some EU leaders have begun to publicly call for the easing of sanctions, the report said.

Problems of European democracies are next on the list of the biggest problems for the EU. So far, the political party system worked, but now is broken, says “EIU”.

Time of mass parties and democracy is over, so new problems are coming for those who want to form a government. The result is an extension of the period of political fragmentation and instability of governments, the study indicates.

Finally, as one of the biggest problems for the EU, according to “Economist intelligence serves unit” is migrant crisis.

Migrant crisis that gripped Europe and then divided it is the worst crisis of its kind since World War II. More than a million refugees arrived in Europe, and the EU is still struggling to solve the problem in the least painful way possible.

Agreement made between EU and Turkey bought a little breathing space, but faces extraordinary political, legal and practical problems. But if that fails, the EU is once again in trouble, says “EIU”.

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  • Buckiballz

    collapsing

  • Brandon Thompson

    There is a typo at the top: “colapsing.”

  • hitmanady

    All the countries should prepare for the fall of the EU