Let us consider the EU’s performance over the last 10 years by way of comparison with the rest of the world.

1. The major financial recession started in 2008 with the bankruptcy of Lehman Bros. To understand why it started one must glance at the years running up to 2008. George Bush Jnr was the President of the USA and Gordon Brown was the Prime Minister in the UK. He had been preceded by Tony Blair who resigned as Prime Minister after 10 years.
2. London and New York were the two most important financial centres in the world. The New York market expanded rapidly due to the lack regulations at that time and banks financed a property boom by lending to people were and would be unable to meet their repayment commitments.
3. Gordon Brown, who had been the Chancellor of the Exchequer throughout Tony Blair’s  term in office, allowed the UK banks to follow their counterparts in the USA and they also over lent. He also allowed the banks to overstretch themselves through derivatives etc.
4. When the crash came, Northern Rock went into liquidation and the Royal Bank Of Scotland together with Lloyds bank plc only survived because they were bailed out by the Government. Due to the actions of the Labour government is committed the country to quantitative easing and a period of austerity.
5. When the Conservatives were elected they had no other alternative but to continue with the policy which Gordon Brown introduced. Despite the difficulties the GDP growth of the United Kingdom has been above 1.5% of GDP over the last 10 years. Its exports have increased and it is now running with close to full employment.
6. As far as the EU is concerned, it has a single currency which is used in the majority of its member countries. However, there is a wide difference between the financial strength of some countries which are led by Germany and those that have severe financial difficulties. Italy is the largest country which is now in a critical financial situation. There are other smaller EU countries that are in a similar position.
7. Due to the financial structure of the Euro, which has a fixed exchange rate, a fixed monetary policy and allows free capital flows the currency is bound to fail because the stronger countries will become richer and the weaker countries will decline in strength. The stronger countries will require a higher interest rate to avoid an overheated economy but at the same time the weaker countries will require a lower interest rate to support their failing industries.
8. As a result Italy now has debts of €2.2 billion and loans from the European Central bank which is above €4 billion. The Italian Banks collectively have non-performing loans which are approximately 15% of the total outstanding loans of those banks. Further due to the free movement of capital euros are flowing out of Italy to the stronger banks in northern Europe or to banks outside the EU.
9. Italy is close to the lending limits of the European Central bank. Germany in particular through the AfD are threatening to stop any further loans being made by Germany to Italy and the new Italian government is considering its options one of which is to return to the lira.
10. If Italy’s economy fails there is a high risk that there will be a major international recession.
11. While this has been going on, the majority of the world has been reporting a substantial increase in their GDP and economies in the far east and America are booming.