EU on brink: How coronavirus exposes ‘critical flaw’ in bloc’s principles

This is because the globalist nature of the EU stands at odds with efforts made to slow the spread of the coronavirus, which could lead countries to approach freedom of movement and goods with more caution. Professor Iain Begg tells that while the concept of globalisation within the EU will be questioned, he doesn’t see it leading to its abandonment in the bloc. He said: “There is going to be a global questioning of globalisation – I don’t see it being diminished.

“You can think of European integration as a mini form of globalisation – it benefits the capability to supply chains.

“In relation to the coronavirus you have to look at Switzerland which has open borders with the EU and the UK which is no longer in the bloc, and both have been significantly affected.”

Europe has been declared the epicentre of the pandemic, with lockdowns now being enforced in France, Italy and Spain.

The European Commission has also shut the continent’s borders for non-essential travel after a vote last week.

Professor Begg – an economist at the London School of Economics – believes however that old feuds from the 2008 financial crash could resurface.

Despite austerity measures, Greece required huge bailout loans in 2010, 2012, and 2015 from the International Monetary Fund, Eurogroup, and European Central Bank.

Portugal, Ireland, Spain and Cyprus were also unable to repay debts without the assistance of other countries, the European Central Bank, or the International Monetary Fund.

Professor Begg said: “Some of the fallout may reemerge because – the expression used by political economists is ‘moral hazard’.

“If you give somebody insurance against a contingency that is misguided, they will be more inclined to do it.

“If you are insured for driving drunk you are more likely to drive drunk.

“The northern Europeans frequently cry ‘moral hazard’ on proposals to share the risks with southern Europe.

“They say: ‘if we are generous to the Italians, Greeks, Portuguese and the Spanish – guess what – they will misbehave.

“Meanwhile, the other side say ‘we need a bit of risk support otherwise we can’t alleviate those risks.’

“This has been a running argument for years now and could resurface if the coronavirus is restricted to a blip in the system.”

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Last week, President of the European Central Bank Christine Lagarde announced a huge bond-buying programme worth £680billion as she looked to stimulate the European economy amid the coronavirus crisis. But the move may cause division in the bloc.

Professor Begg believes this could also lead to fractures in the relationships between national governments and banks.

He added: “In political terms there has been a strong resistance, especially from Germany and some of the other creditor countries inside the eurozone to this action by the European Central Bank.

“There are two things going on here. One is for several months now the central bankers have been saying ‘we’ve done our bit!’

“Not just in relation to the health crisis, but also dealing with the slowing down of the economy after 2008.

“But the fiscal authorities – state governments – have been deficient in what they have done, they haven’t stimulated the economy appropriately.”

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