The EU’s biggest problem is that its economic model has aged alongside its population. Europe has plenty of world-class companies but, unlike the US, none of them were set up in the past 25 years. In Europe’s golden age, Volkswagen was a rival to Ford, and Siemens could go toe to toe with General Electric. But there is no European Google, Facebook or Amazon and in the emerging technologies of the fourth Industrial Revolution, such as artificial intelligence, Europe is nowhere. [...]
When plans for the euro were being drawn up 30 years ago, the assumption was that the single currency would make the single market work more efficiently and so generate faster growth. It hasn’t happened. The performance of the eurozone countries has got worse not better, but so much political capital has been invested in the monetary union project that there is an unwillingness to accept as much. [...]
Italy has tired of waiting for monetary union to deliver. Its banks are in even worse shape than Germany’s, Rome has no control over monetary policy and its attempts to boost growth by running a bigger budget deficit have fallen foul of Europe’s hardline fiscal rules. Last week, Italy’s government announced it would be the first EU country to take part in China’s Belt and Road initiative – an attempt to link Asia, the Middle East, Africa and Europe with a series of ports, railways, bridges and other infrastructure projects. Italy’s willingness to take part in the attempt to recreate the old silk road reflects its desperation to revive its economy by any means available. It also reflects Europe’s diminished status in the global pecking order.
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