The European Union (EU) was established in 1957 with initially just six members in 1957 and has grown to 27 members that now includes almost every country in Europe and forms the most important currency block in the Globe.
It would be unfair to say that countries like Portugal, Greece, Italy, Spain, to name a few, haven’t benefitted from economic integration, as they have received large amounts of funds for almost every imaginable aim. But, it would also be unfair to understate the primary benefits enjoyed by the “core” countries such as France and Germany. With a total of more than 330 million people residing within the Eurozone, it is certainly a tasty market for many countries such as Germany and where exports account for 50% of their economy (although this is likely to diminish with the renewed strength in the Euro). Receiving funds from the Common Agricultural Policy was also a great deal for France, not only because it helped develop the country’s non-competitive agriculture sector but also because it helped eliminate competition from peripheral countries which received funds to effectively cease agricultural activities.
Unfortunately, the financial crisis put some pressure on the Union as Europe was severely hit – particularly Southern European countries. Fortunately, and according to the latest statements from our esteemed German leaders, the President of the European Commission and even Christine Lagarde from the IMF, the worst is already behind us and everything is quiet and harmonious again. Yeah right! This statement is not exactly underpinned by recent economic data however…
Let us evaluate the situation by using something different today than the usual debt-to-GDP and GDP growth rate measures and let’s look at something more socially-aware – the so called misery index.
The misery index is calculated by adding the unemployment rate to the annual inflation rate. The resulting sum produces a measure of unhappiness or “misery” for a country. This simple measure can at least give us an idea of what is happening in Europe. We collected data from the end of 2007, pre-financial crisis, and from the third quarter of 2012, to compare and identify qualitative differences inside the EU. Let’s take a look:
Misery is now much more exacerbated than it was in 2007 in both the EU and the wider Eurozone. This is primarily a result of the “worst” of the 2 evils – unemployment as opposed to inflation. Even Germany has experienced a rise in its misery index, from 7.4 to 7.8. That however is nothing compared to the other countries. Misery in the group of six founders of the EU (France, Germany, Italy, Belgium, Luxembourg and Netherlands) rose from a collective 8.6 to 10.2 while amongst the PIIGS it changed from 9.4 to 21.1 – more than doubling. Countries like Spain, Greece and Portugal had a misery index around 11 in 2007 and now they are top spots on the list with values ranging from 19 and 28.
It seems that the Union’s only real beneficiary is Germany. The current monetary policy, with the ECB being the only bank in the World actually shrinking its balance sheet, is tailored for Germany, not for the Union. It’s no surprise that citizens from peripheral counties talk about the possibility of exiting the Eurozone, even the UK is becoming tired of this German-led dictatorship. We all recall how that last episode ended..!
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