“The EU economy has been expanding for the fifth year in a row.
Unemployment is at its lowest since 2008, banks are stronger, investment is picking up, and public finances are in better shape.
Recent economic developments are encouraging, but a lot remains to be done to overcome the legacy of the crisis years.”
Source: EU commission
However, looking a bit deeper into these statistics, the FT has found that Greece, Italy and Portugal still have not recovered. The percentage point change in annual GDP since 2007 was -24.8% for Greece in 2017, -6.2% in Italy, and -2.4% in Portugal.
Investment levels only improve slowly in the euro area. The commission’s forecast predicts it will only edge close to pre-2007 levels by 2018 or 2019.
Unemployment levels have gone down since the crisis. Unemployment levels were however still very high; for the euro area they stood at 9.1% in June 2017. But there were widespread differences between euro area countries, according to Eurostat. In April 2017 21.7% of people were without a job in Greece. In June 2017, unemployment was 17.1% in Spain, 11.1% in Italy, 9.6% in France, 9.0% in Portugal, and only 3.8% in Germany.
Incomplete economic and monetary union
The European commission recognises that it still needs to complete economic and monetary union (EMU). Among the proposals for reform, one can find the European fiscal board and “simplification” of the rules for fiscal stability. However, there is little agreement between member states on this. In terms of the banking union, the EU works on further reducing risks in the banking sector, greater financing options for firms through capital markets, and the European deposit insurance scheme.
Source: European commission
“The EU is failing forward”
Jones, Kelemen and Meunier argue that “Europe is failing forward.” In an article for the Washington post, they argue that: “Failing forward involves a painful cycle of crisis followed by incremental reform that leads to deeper integration.”
The authors explain:
“First, bargaining between European leaders, some of whom are unwilling to delegate significant powers to the E.U. level, leads them to establish institutions that are incomplete in crucial respects. These institutions work, but not very well and certainly not as well as they might have if they were more comprehensive. The incompleteness of these institutions later helps spark a policy crisis that threatens to destroy whatever progress they have made toward integration.”
They continue their analysis:
“Unwilling to allow such a collapse, E.U. leaders agree to the minimal set of reforms they think are necessary to save what they have accomplished, strengthening their common institutions but still leaving them incomplete in ways that will later spark another round of crisis and reform. The failing-forward cycle alternates between incomplete integration, followed by crisis, followed by incomplete but deeper integration, followed by crisis, and so on.”
They take the examples of the steps towards a banking union, the bailouts, and how the EU deals with the migrations as parts of a behavioural pattern that emerges. The “muddling through” that has characterised most of the efforts made during the recent Eurocrisis, may work in the short term, but is inefficient and self-undermining, the authors argue.
They state that Europeans are running out of patience, and are not so much against the EU as they are against an EU that doesn’t work: “They see an E.U. that appears to stumble from one crisis to the next, perpetually behind the curve and offering half-baked policy solutions that prove unsustainable.”