Brexit 'shock' threatens to do far more damage to the European economy than to BritainIt's best to get off a ship run by fools.
"The upshot is that despite the turmoil of the last several months, it is now eminently possible that Britain will show a higher rate of growth in the post-Brexit third quarter than the Eurozone. Few if any would have predicted such an outcome.
The British economy sails on as if nothing has happened, but the European one continues to stagnate. It is as if the Brexit shock has been more powerfully felt in Europe than in Britain. Both France and Italy showed no growth at all in the second quarter, and now even the data from Germany is starting to look poor.
That the Eurozone economy is still struggling after everything that has been thrown at it almost beggars belief. In terms of stimulus, it is hard to know how much more of a following wind the euro area could have had. It’s been positively gale force. Austerity has been effectively ended, interest rates have been cut below zero, the economy has been flooded with newly printed money, the euro was devalued and to cap it all, there has been the monumental boost to disposable incomes provided by the low oil price.
ECB The Eurozone economy is still struggling
Yet still the European economy is struggling to raise itself from its sick bed. The danger is that the depression gripping large parts of Europe has gone on for so long now that they have lost the capacity to mend, a phenomenon known as hysteresis.
All this suggests that the problem with the European economy is not so much the European Union as such as its experiment in monetary union. Europe is stuck in an economic funk of its own making, where politically it can neither move forward with the sort of institutions and policies that might in the long run make the single currency work, nor backwards to the restoration of flexible exchange rates and sovereign monetary policy."
Thursday, September 8, 2016
Boon to Britain; Stagnation to EU