For the political class in the UK, Brexit has become an all-consuming obsession, sucking the oxygen out of virtually everything else. Yet for the EU’s high command in Berlin, Brussels, and Paris, it is but one of a multitude of crises, and, despite the importance we attach to it, far from the most significant of them.
View photos
Most of these crises, including Brexit, might, on the other hand, be said to have a common cause – Europe’s reckless and deeply divisive rush to monetary union. From the start, the single currency was a classic case of attempting to run before learning to walk, or as the Daily Telegraph put it in a leader at the time of Maastricht, it piled “Mount Pelion on Mount Ossa”.
Instinctively, the UK recognised the risks, and determined to remain apart, thereby putting itself on an eventual collision course with an EU intent on ever greater levels of sovereign subversion to support the foolishness of its monetary experiment.
By imposing inappropriate macro-economic policies and an uncompetitive exchange rate, monetary union has made an already dire condition very much worse
Most of the countries that have signed up to the euro are still a million miles from being ready for a common currency with Germany. For the first seven or eight years, things muddled along without serious mishap, but beneath the apparent calm the single currency was incubating the mother of all economic and financial crises. Voluminous money printing by the European Central Bank eventually succeeded in extinguishing the worst of the fires, but the crisis never entirely went away, and now, with the possible formation of a populist Government in Italy, it threatens to come storming back again.
Most of Italy’s problems are home grown; the great tragedy of modern Italy, the birthplace of much of what is good and civilised in the world, is that it has become little more than a museum, a place of entrenched vested interest and immunity to serious political, judicial, and labour market reform.
View photos
Yet the euro has greatly compounded this predicament. By imposing inappropriate macro-economic policies and an uncompetitive exchange rate, monetary union has made an already dire condition very much worse. Almost unbelievably, the economy hasn’t grown in nearly 20 years, a hiatus whose duration is unprecedented in the modern age.
There is a lot of love among British eurosceptics for Italy’s new brand of populist political leader, as there was at the beginning for the hard-Left Syriza-led Government in Greece. My enemy’s enemy is my friend seems to be the logic; anything that pushes against Brussels is by definition welcome, however deluded the proposed policy agenda.
But deluded, incoherent and utopian it most certainly is, to judge by what has so far been said by and attributed to the mooted Five Star alliance with La Lega, a bizarre and manifestly unstable pick and mix of Left and Right that combines a flat rate tax to satisfy the more prosperous north with guaranteed handouts for the impoverished south. The chances of the alliance holding together seem remote, which is partly why markets have so far been relatively relaxed about the threat it poses.
