The European hegemony, and by that I mean those countries that eschew the Anglo Saxon principles of free markets and flexibility of employment, faces a decade of civil, political and economic chaos; as the economic reality of the global economy hits home.
The critical issues facing Euroland include:
The overvalued Euro.
The lack of mobility of labour between member states, due to language and bureaucratic barriers.
The excessively high interest rates being maintained by the unelected, and unaccountable, members of the ECB.
The self delusion of the occupants of Euroland with regard to their overpaying themselves, relative to the rest of the world, in terms of salary, benefits and pensions.
These issues, unchecked, will have the following consequences:
Investment from the rest of the world will decline; as companies seek more flexible, business friendly economies to invest in.
The overvalued Euro will suck in imports and suppress exports; further eroding the job market, and standard of living of Euroland.
The high interest rates will cause the European economies to stagnate, causing job losses and reduced tax revenues.
The level of salaries and benefits, which are unsustainable, will be forcibly corrected; either by cuts in salary/benefits or job losses.
There will be a knee jerk reaction to non Euroland products, ideas and capital flows; causing a rise in protectionism, and the consequential worsening of the Euroland economy.
The downturn in the Euroland economy will see a rise in racism and attacks on “non Euro” residents.
The situation that Euroland faces, with respect to its rigid inflexible working practices and economic stagnation, is similar to the situation that the UK faced in the 1970’s. The corrective actions effectuated by Margaret Thatcher, and her cabinet, in the 1980’s gave the British economy the flexibility and strength that it needed to survive the economic globalisation of the 21st century.
However, the changes pushed through the British economy in the 1980’s came at a very high price; with job losses in the traditional heavy industries and significant social unrest. The UK, as a society, managed to navigate its way through this period of social upheaval by being fortunate enough to have a Prime Minister and cabinet that had the clarity of vision and strength of purpose to maintain a course of action that they believed to be right.
Euroland, in my opinion, does not have access to such a leader; nor indeed do its political parties have the backbone to present to their voters the unpalatable truth about the situation that they are facing.
The result will be an inevitable economic decline, with Europe spiralling into a decade of social, political and economic chaos. The straws in the wind are already evident; with yet another air traffic controllers strike in France, and the recent demonstrations in Germany and France about public sector benefits and pensions.
My advice to the UK is to avoid further integration with Euroland, as the UK will only be sucked into this impending chaos.