The European Union’s survival skills have been put into question as economist Stephen Roach cast doubts on the ability of the bloc to sail through another major crisis such as Brexit or the Italian recession. Brussels has faced numerous challenges to its strength with the rejection of plans to further integrate member states and the ongoing fragility of the common currency, the Euro, in the aftermath of the global economic crisis of 2008. Speaking to CNBC, Professor Roach said: “You have to wonder about the future of the European Union itself.
“It was never an optimal currency zone as the theorists wanted it to be designed and its been subjected to a wide array of shocks from the sovereign debt crisis to the lingering problem from Italy and now Brexit.
“How much can this political arrangement withstand in terms of pressure on the very fabric of this economic union? I think this is a deep question and one that is very troubling to contemplate in the future should there have to be further adjustments in this arrangement.”
As top Eurocrats battled with Britain to secure a withdrawal deal after the Brexit vote, Italy sunk into recession sparking fear across the union.
Italy, one of the core founding members of the bloc, has the biggest government debt in the EU at more than £2tn and the fourth-largest government debt in the world.
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The country’s debt burden as a percentage of annual economic activity is second only to Greece in the EU at 132 percent.
European Commission chiefs in February warned about the possible threats coming from Italy and accused the eurosceptic Italian government of failing to make plans which would have provided for long-term growth with lower retirement age and a “citizen’s income” for the poor coming in for particular criticism.
The Southern European state, however, was not the only member of the European Union to show signs of economic uncertainty.
In early March, Germany saw its Purchasing Managers Index (PMI), a criteria investors observe to test the state of national growth, fell nearly two points between January and February in what was the worst barometer value in more than six years – falling from 49.7 to 47.6 points.
Italy saw its reading edge down marginally to 47.7 points from 47.8.
Spain’s rating plummeted to a five-year low of 49.9, with the Netherland’s barometer score falling to 52.7 – the worst in nearly three years.
Growth improved slightly in France, albeit only marginally, from 51.2 in January to 51.5 last month.
Brussels has also had to fend off growing pressure ahead of the European Elections scheduled to take place in May, with firebrand Hungarian leader Victor Orbán launching a scathing attack on the bloc after his Fidesz party was suspended from the centre-right European People’s Party (EPP) over an anti-immigration poster campaign which targeted European Commission President Jean-Claude Juncker.
Mr Orbán said: “Brussels politicians live in a bubble. They’re creating a Brussels bureaucratic elite, which has lost touch with reality.
“We are not willing to do what Brussels dictates if it is not good for Hungarians. We must not be frightened of Brussels bureaucrats in their offices who in sly ways want to force on us what they conceived above our heads in Brussels.”
The Hungarian President encouraged voters to pick Fidesz in May’s Euro-elections and “show Brussels that what happens in Hungary is what the Hungarian people want”.