I was interviewed by Sophie Roell of fivebooks.com about Europe and in particular five excellent books on Europe
The euro was supposed to facilitate economic convergence between the countries using it and foster the development of a stronger ‘European’ identity. Philippe Legrain argues that the reverse is now happening. European policy-makers are mostly to blame, because of their attempt to create a Germanic and technocratic eurozone. They have damaged the currency union by failing to address the root causes of the crisis. And by further constraining governments’ scope to respond to democratic pressures, they have eroded the legitimacy of both national and EU institutions. The eurozone needs to change direction. So long as a fiscally federal eurozone remains out of reach, governments should work towards a flexible one comprising a genuine banking union, a reformed ECB and greater fiscal flexibility for governments.
“Se suponía que el euro serviría para facilitar la convergencia entre países; durante años eso fue, a grandes rasgos, lo que sucedió. Hasta que llegó la crisis y Bruselas, de la mano de algunas capitales, impuso una serie de políticas que han acelerado el proceso contrario”, indica Philippe Legrain, exasesor del presidente de la Comisión Europea, José Manuel Barroso.
“Los políticos europeos llevan meses declarando victoria porque asoma algo de crecimiento después de que con sus recetas causaran innecesariamente una profunda recesión. Pero los españoles son comparativamente más pobres debido a una respuesta a la crisis errónea e injusta”, dice el autor del sugerente Primavera Europea.
Read my article on the wider context of the EU elections for Quartz on 26 May 2014
In his review of European Spring in the Financial Times, Ferdinando Giugliano writes:
His book is a well-informed and blistering critique of errors made by European policy makers since Greece revealed the extent of its fiscal woes in 2009-10. It is essential reading for those who wonder how an economic powerhouse managed to stumble into a sovereign debt crisis that ended up threatening its very existence.
The EU has just had 28 national elections rather than one European one. Even so, some trends stand out:
1. Most people didn’t bother to vote.
Even with the enhanced powers granted to the European Parliament by the Lisbon Treaty, the novelty of candidates campaigning to be European Commission president and a chance to cast a verdict on the disastrous policy response to the worst crisis since the 1930s, only 43% of Europeans bothered to vote. Ludicrously, EU insiders celebrated that as a success!
Excluding countries where voting is compulsory, the only countries where a majority of people voted are Ireland (where turnout fell from 58.6% to 51.6%), Italy (where it fell from 65% to 60%) and Malta.
2. Support for incumbent parties collapsed in crisis-hit countries.
Except in Germany, which has scarcely suffered from the crisis, and Italy, where Matteo Renzi’s government is only months old, incumbents got whacked.
In Britain, the Conservative Liberal Democrat coalition fell from 40.4% (27% +13.4%) to 30.8% (23.9% + 6.9%)
In Spain, the PP (right-wing) plunged from 42.2% in 2009 to 26.1%.
In Greece, the New Democracy (centre-right) PASOK (centre-left) coalition sank from 69% (32.3% + 36.7%) to 30.8% (22.8% + 8%).
In Ireland, the Fine Gael (centre right) Labour coalition sank from 43% (29.1% + 13.9%) to 28% (22% + 6%).
In Portugal, the PSD (centre-right) CDS (right-wing) coalition fell from 40.1% (31.7% + 8.4%) to 27.7%
In France, the Socialists slipped from 16.5% to 14%.
In the Netherlands, the VVD (centre-right) Labour coalition slipped from 23.4% (11.4% + 12.1%) to 21.4% (21% + 9.4%)
3. The previous ruling party, also tarred with responsibility for the crisis, generally failed to benefit.
In Spain, the PSOE (centre-left) polled 23%, down from 38.5%.
In France, the UMP (centre-right) got 20.8%, down from 27.8%.
In Ireland, Fianna Fail (centre-right) got 22%, down from 24.1%.
Two countries bucked the trend.
In Portugal, the Socialists got 31.5%, up from 26.5%.
In Britain, Labour did much better than in 2009, polling 25.4%, up from 15.3%, but still coming second behind UKIP.
4. The main beneficiaries were extremist parties, mostly of the far-right.
UKIP topped the poll in Britain, with 27.5%, up from 16.1%. The combined far-right vote (UKIP + BNP + English Democrats + An Independence from Europe) vote rose from 23.9% to 31%.
Marine Le Pen’s Front National came first in France, with 25%, up from 6.3%.
The Danish People’s Party also came top, with 26.7%, up from 14.8%.
Austria’s Freedom Party came third, with 19.5%, up from 12.7%.
Neo-Nazis came second in Hungary (Jobbik polled 14.7%), third in Greece (Golden Dawn got 9.4%), fifth in Sweden (the Sweden Democrats got 9.7%) and gained a seat in Germany.
Flemish Nationalists came top in Belgium.
On the far-left, Syriza came top in Greece, with 26.6%, up from 4.7%.
Beppe Grillo’s anti-establishment 5-Star Movement got 21.6% in Italy, but was trounced by the centre-left.
5. Fortunately, some countries resisted extremism.
In Spain, where support for the traditional governing parties plunged from 80.9% to 49%, the country seems inoculated against far-right extremism by its recent experience of fascist dictatorship, so the main beneficiaries were a variety of centrist parties.
In Portugal, which also emerged from fascist dictatorship only four decades ago, the swing against the traditional governing parties was smaller, and the beneficiaries also varied.
In Ireland, independent candidates topped with poll, with 24% of the vote.
In the Netherlands, the social-liberal Democrats 66 party came first, with 15.5%, pushing Geert Wilders’ racist PVV into third place on 13.4%.
6. Apart from extremists, the big winners are Angela Merkel and Matteo Renzi.
Angela Merkel’s CDU-CSU won the German poll, confirming her position as the de facto leader of Europe’s centre-right. The CDU-CSU will continue to dominate the EPP (European People’s Party) group, which lost many seats but will still be the biggest in the European Parliament. She will have a decisive say over who the next European Commission president is, perhaps Jean-Claude Juncker after all.
Matteo Renzi scored an overwhelming triumph in Italy, winning 40.9%, nearly twice the score of his nearest rival, making him the de facto leader of Europe’s centre-left. The PD will become the biggest bloc in the S&D (Socialists & Democrats) group, which is set to finish slightly behind the EPP. With a huge mandate for reform, and with Italy set to take over the rotating presidency of the EU in July, he is best-placed to demand a different crisis response, including a more flexible interpretation of EU fiscal rules.
I was interviewed on Today FM’s The Last Word with Matt Cooper about the collapse in support for mainstream parties ahead of the European elections. It starts 19 minutes in
I was interviewed by Sebastian Stodolak for Obserwatorfinansowy.pl ahead of my speaking at the European Financial Congress in Sopot, Poland on 23 June 2014.
The Economist writes:
Philippe Legrain, who once worked for The Economist, was another close observer of the euro crisis, as an economic adviser to the European Commission president, José Manuel Barroso. His conclusions are similar to Mr Pisani-Ferry’s, if more stridently expressed. He is particularly good on (and particularly scathing about) the shortcomings of his own institution and the ECB. He is not popular in Brussels or Frankfurt.
Mr Legrain argues that Europe should have tackled its banks’ problems much sooner than mid-2012, when it decided to create a (still incomplete) banking union. A big reason why America has recently grown faster than Europe is that it did more to sort out its banks in 2008-09. Mr Legrain is also right to criticise the ECB for its half-hearted bond purchases before July 2012, when it finally emerged as a proper lender of last resort. Only in the second part of his book, when he moves into broader topics such as education, innovation, climate change and democracy, culminating in his call for a “European spring”, are his arguments sometimes less persuasive.
Both authors agree that the aftermath of the crisis is an unsatisfactory one that may not endure. Even if markets do not turn sour again, most of Europe seems stuck with low growth, high unemployment (especially for young people) and a horrible debt burden. The risk of a “lost decade” similar to Japan’s in the 1990s is worryingly high. Worst of all is the broad disillusion of voters with the entire European project, which will be expressed in this month’s European elections through big gains for populist and extremist parties….
What is striking is how much the authors agree about the failings of the EU and the euro, which is stuck in a half-completed house. Where they differ is in the solutions they propose.Europhiles want deeper integration and more centralised powers. That was proposed this spring by the German-led Glienicker group and by the French-led Eiffel Europe group. It is also backed by Loukas Tsoukalis, a Greek academic, in an essay, “The Unhappy State of the Union”, published by London-based Policy Network.
Yet few voters feel warmly about ever closer union; many would agree with Mr Bootle that this aspiration of the original Treaty of Rome should be formally ditched. Nor do many welcome ever greater intrusion by Brussels and Frankfurt into domestic politics. A more plausible idea, backed by Mr Legrain, is to restore greater freedom to national governments but reinstate the principle that they will not be rescued by the centre if they get into trouble.
The biggest worry may stem from the perception that the crisis is over. This is likely to slow or even stop further reforms. If that happens, the EU and the euro will get into trouble again—and the outcome next time could be even worse.
John Peet, Europe Editor of The Economist, adds:
Philippe Legrain convincingly argues that euro-zone policymakers made several big mistakes: there was too much fiscal austerity, they were too slow in trying to mend the banks and the European Central Bank delayed for too long in becoming a lender of last resort. The euro may have survived, but the system remains unstable and Europe still needs a lot more reform if it is to prosper.