European Economy
Just last week, the Secretary General of Red Cross, Bekele Geleta, warned that the ever increasing unemployment and poverty in some of the European countries is fuelling unrest and that these issues may result in a sudden uprising of the masses if proper measures are not taken to resolve them. Wolfgang Schaeuble, Finance Minister of Germany, while talking about the same issues, warned of disintegration of Europe if unemployment was not brought under check.
Just preceding these statements, Sweden, one of the most stable and economically sound countries of Europe, witnessed the eruption of massive riots in its capital city, Stockholm. Interestingly, the Swedish capital of Stockholm is considered to be one of the most economically affluent cities in Europe. Never before in the past has Sweden witnessed riots on such a large scale. These riots have effectively underlined how the proverbial bubble regarding Europe’s affluence has burst over the years.
Most of the countries in Europe are facing significant reduction in their GDPs, with most countries facing a rising mountain of debt. Amidst all this, Sweden has managed to maintain a healthy rate of economic growth, so much so that today Sweden is considered to be financially much stronger than Germany and France. That the riots have taken place such a large scale inspite of the sound financial health of Sweden has left many confused. The reason for the riots inspite of the sound financial health of the country is being attributed to the changed circumstances over the past few years, in the aftermath of the recession. Stockholm and its adjoining areas have witnessed a huge influx of migrants. People have come here in hordes in search of jobs and dreams of a better future, but still these remain distant realities for them. Employment opportunities have drastically reduced and even the young, educated class has found it difficult to get jobs. A similar situation is being faced across Europe. The highest youth unemployment rates in Europe have been observed in Greece where they have skyrocketed to 64.2% and are also close to hitting 75% in some parts of the country. Spain too has been facing this extremity where youth unemployment rates have been at a staggering 56.4%. Portugal too is not far behind with youth unemployment rates being as high as 42.5%. At the same time, other EU members viz., Cyprus, Latvia, Ireland, Lithuania and Estonia have also been seeing higher and increasing rates of unemployment. Also a whopping one third of all individuals between the ages of 15 and 24 are at risk of poverty in the EU.
Coupled with this, over the past two years, the local self-governing bodies have also drastically reduced their spendings on various social welfare schemes, which also includes cuts in the grants to educational institutions. This has further aggravated the disenchantment and dejection of the youth, which found expression in the form of the Stockholm riots.
Similar riots were witnessed on the streets of United Kingdom in the year 2011. London was up in flames for five long days. This violence and disquiet soon spread to its neighbourhoods and adjoining towns. Shops were being looted and police were seen to be helpless. It was later observed that these riots too had their roots in similar economic problems of growing unemployment, poverty, influx of migrants and the widening rich-poor divide.
The Stockholm riots have not only underlined that fact that the conditions in Europe haven’t improved since 2011 but have rather pointed towards the possibility of a break-up of the Eurozone, which would ultimately result in the break-up of Europe. The picture of reduction in recession and improvement in economic conditions which is being projected is, in reality, much below its actual rate.
To reduce the strain on their exchequers most of the countries have introduced multiple austerity schemes. The growing helplessness owing to job losses that have resulted in backbreaking of family spendings and sustenance which, coupled with significant reduction in the release of grants from Governmental schemes, has been fuelling the popular discontent across Europe. Countries like Greece, Portugal, Italy, Ireland and Spain have clearly witnessed this popular discontent against the cuts in social spending in the recent past. It is, however, worth noting that this discontent is also being witnessed in an economically stable nation like Germany.
In the year 2011, while the Arab countries were engulfed in the flames of revolt, streets in the US and Europe were being rocked by the ‘Occupy’ agitations. Scores of people had taken to streets during these agitations which were targeted against the western governments that were engaged in protecting the interests only of capitalist businessmen. Many major cities across the globe were also witnessing these agitations. A similar movement, under the name of ‘Blockupy’ has now been brewing in Europe since a year or so. The situation seems highly contrary as the European countries that benefited and prospered from their capitalist policies are now actually facing a revolt against the same. It is important to note that Europe and even the economically stable Germany has been the land of origin of these agitations. These agitations are mainly against the austerity measures that are being imposed on various European governments the by European Union, European Central Bank and International Monetary Fund because of the bailouts that have been issued by these organizations to them.
What has compounded the crises further is the demand of many economically prosperous regions in various European countries that have been longing for their independence. The list of these regions is very long and includes the Veneto and Lombardy regions of Italy, Scotland which is part of United Kingdom, Catalonia in Spain, Flanders in Belgium, Corsica in France, etc. Being prosperous, these regions have been contributing the maximum to their respective national GDPs and tax collections; yet the benefits, facilities and developmental projects that they get in return are abysmal. This disparity has been fuelling a long standing discontentment in these regions, which are now transforming into vociferous demands of independence. Thus, in short, the economic downfall in Europe may not just result in the breaking up of the Eurozone, but may also result in the separation of various regions and provinces of many European nations.
At a time when the US Dollar has already become unstable, the future of Euro too looks unsure. It surely can be said that this huge increase in unemployment and poverty, coupled with diminishing growth rates of European economies are pointing towards outbreak of yet another recession, which would result in the sinking of not just the Eurozone but of Europe as a whole. It is also worth noting that against the backdrop of these events Indian Rupee has been seeing a massive fall against the US Dollar with Rupee falling to its all time low of 57.14 to the US Dollar as on today.