Meeting of German, French, Italian heads reflects uncertainty

London

A MEETING this week of Germany's Angela Merkel, France's Francois Hollande and Italy's Matteo Renzi reflects the Eurozone's political and economic uncertainty in coming months.

Relying on symbolism to show that the Eurozone and European Union projects remained on course despite Brexit, the three leaders visited the Italian island of Ventotene. There they laid a wreath on the tomb of Altiero Spinelli, the Italian intellectual who is regarded as a founding father of European unity.

Significantly the leaders said in a press conference that Europe had to reject populist parties that are euro- sceptic. Without going into details, they called for closer security cooperation and better opportunities for young people.

"For many populists, Europe is to blame for everything that goes wrong," Mr Renzi said. "Immigration, it's Europe's fault, the economy is bad, it's Europe's fault. But that is not the case."

The talks marked the beginning of a week of meetings for Mrs Merkel with other European governments. She will travel to four countries and receive leaders from another eight.

"We respect Great Britain's decision but we also want to make clear that the other 27 (member states) are banking on a safe and prospering Europe," the German chancellor said.

Despite these claims, the Eurozone, in particular, is not flourishing. In the past 12 months, according to Eurostat, which compiles the economic numbers for the region, economic growth has improved by 1.6 per cent. Also, since the immediate slide after the UK referendum, stock markets have improved by 10 to 16 per cent with Germany and Spain being the best performers.

Despite that, gross domestic product (GDP) of the Eurozone has risen by only 5.6 per cent from pre-crash 2008 levels, mainly because Germany has grown by 13.8 per cent. In contrast, compared with 2008, Greece's GDP has contracted by 33.4 per cent, according to Trading Economics, Netherlands down by 19.5 per cent, Spain by 11 per cent, Italy by 9.7 per cent and France by 1.8 per cent.

Overall unemployment has fallen from 11.1 per cent a year ago to 10.1 per cent, but there are 2.9 million youths without jobs and the unemployment rate of young people is 20.8 per cent.

According to a poll of 68 young leaders on Europe's future by Politico, a specialist political site, the greatest concerns of Europe's youth are not terrorism, Brexit, migration, or even climate change.

For 81 per cent of participants in Politico's first "Youth Caucus", the top concerns are youth unemployment and lack of economic growth.

"Their anonymous answers highlight the EU's ineffectiveness in reaching young people," comments Politico, noting that just over 4 per cent of respondents were concerned about the implications of Brexit. "One respondent summed up the plight of young people in Europe today: Unstable low paid jobs, if any. Stuck in trainee/internships forever. Forced to move to other countries and accept very flexible working conditions. Also home ownership appears out of reach for this generation."

The first Eurozone political hurdle is an Italian referendum to reduce the number of senators in a constitutional reform aimed at ending the nation's unstable governments.

Premier Renzi has promised to resign if he loses and polls show that 34 per cent of Italians would vote against his plan, with only 28.9 per cent in favour and the rest undecided.

The fear is that the anti-establishment, right-wing Five Star Movement is poised to profit from a defeat. Five Star wants to hold a referendum on Italian membership of the Euro. Italy's government debt to GDP is 132 per cent and its banking system is in a critical state.

Elections of Netherlands and France (with strong right-wing populist parties that wish to follow the UK and hold referendums on whether to remain in the EU) will take place in March and April next year. Meanwhile, Mrs Merkel is losing favour and the German elections are in the autumn of 2017.