Leading European economists and experts have warned that the stubbornness of European institutions and a contagion of Euro-scepticism across the bloc is set to create a bumpy ride for the European Union in the coming years.
Keynote speakers including Yanis Varoufakis, former Greek minister of finance, and Jose Manuel Barroso, former president of the European Commission, expressed balanced criticism of the European project while hoping that the institutions will yet carve a way through what is now considered an inevitable recession.
‘The year 2008 was our generation’s 1929,’ said Varoufakis. ‘The EU did not have the institutions to deal with a financial catastrophe of that kind. By comparison, no advanced economy has been less prepared for the next recession than the Eurozone is today. They cannot deal with what is coming now.’
For Barroso, the European project is ‘difficult to take forward when its major stakeholders are its greater critics’.
‘The political problem with Europe is that those that take the initiative are those who are against it,’ Barroso said. ‘Pro-Europeans have been on the defensive. There has been a Europeanisation of failure and a nationalisation of success.’
Barroso suggested that there was a ‘fundamental demographic problem’. ‘People are older. When people are older, they are pessimistic,’ he said.
Meanwhile, head of Bloomberg economics, Stephanie Flanders, suggested that Brexit uncertainty was still one of Europe’s biggest headaches. ‘The change from May to Johnson may be our first instance of a robot being replaced by an unskilled worker,’ she quipped.
‘Brexit is certainly a very important setback. When a club loses such an important member, it’s not good. But I think it’s potentially even worse for Great Britain,’ said Barroso.
Varoufakis said that what were perceived as key ECB dilemmas were actually fairly irrelevant in an environment of inward-looking statesmanship. ‘We used to think that policy was all about finding the golden rule – pushing interest rates down to create economic equilibrium,’ he said. ‘There is no single interest rate that can simultaneously balance savings and investment. Everything else is a repercussion of that.’
Varoufakis added: ‘The Germans have been Europe’s most dedicated Europeans up until now. But the contagion of Euroscepticism now seems to be arriving there. I hope I’m wrong.’
Barroso warned that some of the bloc’s biggest issues moving forward would include ‘Brexit, Putin and Trump’. He said that he still believed in the project, however. ‘We all have a cultural bias. I have a bias. My bias is for Europe.’