Bill Jamieson: We leave Europe as it risks '˜civil war'

French President Emmanuel Macron's hopes for greater EU integration have been stymied by Euroscepticism, writes Bill Jamieson.

Giorgia Meloni, of the Brothers of Italy party, with Matteo Salvini (centre), of the far-right party Lega Nord andSilvio Berlusconi, of Forza Italia, have formed a coalition in Italy (Picture: AFP/Getty)

How insular our wrangling over Brexit has become. We have lost sight of the bigger picture of what is happening within the European Union and its prospects.

The case for membership was always more than a “common market” but belonging to a progressive union in which closer alignment would cement it as one of the world’s most successful geo-political blocs. Yet at Holyrood and Westminster too little has been heard about the state of the union itself and its direction of travel.

The Remainer cause lacks a compelling European model for the UK to emulate. How much more persuasive it would be were politics across the region to be more stable, the benefits of closer union more palpable and its economic performance more convincing. Here the Remain case lacks a narrative broader than tariffs and border protocols.

We should be more aware than we are of this bigger picture, for it begs searching questions, not only over the health of the EU but its very durability.

In France, Germany and Italy, powerful populist movements have raised doubts over political stability and commitment to social democratic values. In France, more than 20 million people voted for one form of Euroscepticism or another in the first round of last year’s presidential election. In Italy, Eurosceptic forces in the form of the Five Star Movement and the Northern League have been rampant. The leaders of the two anti-establishment parties – former outsiders Luigi Di Maio of the Five Star Movement and Matteo Salvini of the anti-illegal migrant League – have become the mainstream. They share a scepticism of Italy’s relationship with the EU while Salvini has promised the mass deportation of those who came to Italy illegally. Where is the unity of purpose or mission? The EU, French President Emmanuel Macron warned last month, risks being torn apart by a “civil war” between its liberal and authoritarian democracies, and must “build a new European sovereignty” and embark on much-needed reforms to save the bloc.

But in pushing for a more integrated banking and economic system, he has been stymied by opposition both at home and across the EU. In fact, since the 2008 financial crisis, Eurozone leaders have tried and failed to put the single currency on a secure footing. Macron’s efforts to promote a fiscal union have been killed off by opposition from Germany’s business lobbies and Italian voters weary of further austerity. Attempts to build a banking union have also foundered. In Italy, there is no political will to comply with the strictures it would bring.

Indeed, the repeated failure to achieve European economic and financial reform reflects a lack of appetite on the part of national authorities to pursue European solutions. Familiar? We are not alone in this.

Across much of the bloc, Eurosceptic movements could be given a further boost should Turkey’s President Recep Tayyip Erdogan rescind curbs on the flow of migrants and refugees into the EU.

Elsewhere, in a thinly veiled swipe at Hungary and Poland, Mr Macron said Europe was in the grips of “a fascination with the illiberal”. Brussels is at loggerheads with Warsaw over Poland’s controversial judicial reforms. And there are concerns about the rule of law in Hungary after Viktor Orban’s successful anti-immigration election campaign.

At home, France is being hit by three months of rolling strikes by rail workers, the biggest test yet to Macron’s drive to reform the country’s economy. The strikes have caused major travel headaches for the country’s 4.5 million daily rail users.

Social strains are increasingly evident. In Germany, Middle Eastern crime clans operate in some cities and towns, while Sweden is grappling with a rise in violent crime in the suburbs of its major cities. There were 306 shootings last year, which left 41 people dead, up from 17 in 2011.

What of the Europe’s economy? Last year Eurozone unemployment fell from 9.5 per cent to 8.5 per cent – the lowest level in a decade and down from a peak of more than 12 per cent in 2013. Most economies churned out positive surprises with better growth. But this benign run may now be at an end. Signs of a slowdown are gathering.

Latest business surveys suggest Germany and France are seeing weakening growth. Industrial output has fallen for three consecutive months in the Eurozone.

Unemployment at 8.5 per cent is still far above the sub-5 per cent rates in the UK and the US, and wildly above Germany’s 3.5 per cent rate. Investment bank JP Morgan warns of a “sharper than expected downshift in global growth momentum” so far this year. This loss of momentum may be reflecting higher political uncertainty in post-election Italy and the spectre of rising protectionism.

Plans for the European Central Bank to halt its bond-buying programme have been called into question amid concerns over a fall in business lending growth. This follows a warning from the World Bank that global growth will start to fizzle out.

Nor is the Eurozone’s motor economy immune. One of Germany’s top economic bodies, the Macroeconomic Policy Institute has warned that the “recession probability” has risen from 6.8 percent in March to 32.4 percent between April and June this year. Retail sales dropped by 0.7 per cent in February, the sixth such fall over the last eight months. Industrial production is down 1.6 per cent – the largest monthly fall in three years. Factory orders are also below expectations after a 3.5 per cent drop in January.

As it is, the EU accounts for a shrinking percentage share of global trade. The concern here is less a forecast fall in growth than the vulnerability of Europe to external events – a transatlantic trade war with the US, a slowdown in China, another debt crisis.

There is little sign that should a new crisis present itself, Europe could formulate a common response. Europe’s decline as a trading bloc would accelerate and its social tensions worsen – all too plausible outcomes that deserve more consideration and debate here at home.