5 / 40
Emmanuel Macron, the 39-year-old
centrist elected as France’s new
president, aims to revive the Franco-
German partnership alongside German
Chancellor Angela Merkel, who stands
a fair chance of winning a fourth term
in September’s federal elections.
Their objective is to rejuvenate
the 60-year-old European Project
through further integration and
cooperation. France plans structural
reform of its labour market, while
Germany appears more willing
to embrace deeper eurozone
coordination and exert a stronger
role in foreign policy and security
5
.
We should not push this contrast too
far.The EU still has problems aplenty.
Italy, for example, also faces elections
amid economic stagnation and high
THE INVESTOR
|
05
BREXIT
L
ittle more than a year
ago, when the UK
voted by 52% to 48%
to leave the EU
1
, Brexit
proponents portrayed
the decision as that
of a dynamic nation departing from
a stagnating union that faced the risk
of further break-up.Today, the picture
looks somewhat different.
The sheen has come off the UK
economy, with growth slowing and
incomes squeezed by rising inflation
2
.
Theresa May – in office just a year and
still prime minister at the time of
writing – is a ‘dead woman walking’,
to quote former Chancellor George
Osborne, after calling a disastrous
general election in which she lost her
parliamentary majority.
The EU, by contrast, has perked up.
The eurozone economy grew faster
than that of the US and the UK in the
first quarter
3
and unemployment has
fallen to an eight-year low, although it
remains high at 9.3%
4
.Where once
there was talk of a domino effect
toppling mainstream parties across
Europe, populist politicians have
suffered setbacks in Austria, the
Netherlands, France, Italy and Finland.
debt, while Spain is heading for a
constitutional crisis over Catalonia’s
independence referendum in October.
Macron faces a tough battle with
trade unions to liberalise labour laws.
Besides, France has eradicated almost all
of its political establishment in a short
sequence of elections. If the country
becomes disillusioned with Macron, it
will have few mainstream options left.
The UK economy still has strengths,
notably a record employment rate
6
. Its
traditional political parties remain
dominant. Even if May is supplanted as
prime minister by another Conservative,
the UK won’t necessarily face another
general election before 2022. A fresh
poll would not be in the interests of
the Tories right now – or, for that
matter, Northern Ireland’s Democratic
Unionist Party, on whose votes the
government depends.
Nonetheless, as Anand Menon,
Professor of European politics and
foreign affairs at King’s College London,
puts it:‘The UK’s political tectonic
plates are moving at the very moment
when we are negotiating Brexit.’
7
Exit negotiations, which began
amicably enough in June, look
arduous.The country remains divided
The eurozone economy
grew faster than that
of the US and the UK in
the first quarter
STATEOF
THENATIONS
By Brian Groom
As the countdown to Brexit begins,how has the political
and economic landscape of the EU shifted since the
UK’s vote to leave one year ago?