Outlook grim for troubled Europe

THE European Union may have won the Nobel Peace Prize but it will not be picking up any awards for economics.

The single currency crisis, and the very future of the euro, took centre stage yesterday as European officials gathered in Brussels to celebrate 20 years of the single market.

It will also dominate the European Union leaders summit on Thursday and Friday after a weekend in which global finance chiefs called for further action to quell the main threat to the world economy. It looks set to be a stormy meeting. Swedish finance minister Anders Borg caused a stir over the weekend when he said Greece would probably quit the euro within six months.

It prompted a rebuttal from Wolfgang Schäuble, Germany’s finance minister.

‘I think it will not happen that there will be a state bankrupt in Greece,’ he said.

Getting ‘single market week’ under way in Brussels – where the theme is ‘together for new growth’ – European Commission president Jose Manuel Barroso described the single market as Europe’s ‘jewel in the crown’ and a key platform for recovery.

Launched on January 1, 1993, it allows 500m people and 21m businesses to move and trade freely across borders within the EU. But the outlook is bleak.

The International Monetary Fund last week forecast growth of just 0.1pc in Europe this year and 0.8pc next. Output in the 17-nation single currency bloc is set to slump 0.4pc this year before growing by a subdued 0.2pc in 2013.

There are more than 25m people out of work in the European Union including 18.2m in the eurozone. Michel Barnier, European commissioner for Internal Market and Services said: ‘Twenty years after 1992, European citizens and companies are still suffering the consequences of an unprecedented series of crises.’

The crisis has also fuelled anti-European sentiment in Britain with sceptics demanding a referendum on the UK’s membership of the EU. The Government, however, remains committed to the single market and keen to ensure that it is run by the 27 members of the EU, including Britain, and not the 17 members of the eurozone. The crisis has also triggered a renewed push for deregulation across Europe in a desperate effort to boost jobs and promote growth. But, as ever with Brussels bureaucracy, progress is slow and business remains strangled by red tape.

There is also the dead-weight of government debt dragging down the European economy.

So while the mood in Brussels is one of celebration and self-congratulation, the reality is that Europe isn’t working.