By Dinesh Weerakkody
For decades, Europe like the US has been a center for wealth creation. Now like the US, Europe and the UK are caught up with deep budget cuts that are hurting vulnerable populations in their countries. EU Governments to get out of their crushing sovereign debts are slashing youth programs, education subsidies, medical and housing benefits. As a result the poorest populations and the immobile underclass are taking to the streets creating economic havoc. Unless Europe takes action soon, its economic and political decline is almost inevitable. Without comprehensive reform, Europe’s overprotected, overregulated economies will continue to slow-and its political influence will become negligible. This doesn’t mean that, Germany and France will become poor nations and become marginalized; their standard of living will remain high. However, because of the euro zone debt crisis that threatens to unravel the single currency and destabilize the region, it could make Germany and France largely irrelevant on the world scene.
Much to Learn
Europe has much to learn from the market liberalism of America. Europeans work less and vacation more than Americans; they value job stability and security above all. Americans, work harder and longer and are more willing to endure the ups and downs of a market economy. Europeans prize their welfare states; Americans abhor government spending. European countries have trouble absorbing their immigrant populations. If Europe is to arrest its decline, it needs to deal with these issues. In addition, Europe need to handle worker productivity, labor market regulation, support for higher education and technology research, fiscal policy, and its multiethnic societies are sure to stir controversy. Therefore, the recent events are a wake-up call for anyone concerned about the future of Europe and the global economy. Because. EUs debt crisis is fuelling a resurgence of polarizing right wing politics and anti-immigrant sentiment.
The EU absorbs one fifth of developing country exports. 40 per cent of EU imports originate in developing countries. The EU is also the world largest importer of agricultural products from developing countries, absorbing more than the US, Canada and Japan taken together. EU is the main trading partner of the developing world, with a preferential trade volume more than three times higher than the US; the EU has implemented a series of preferential trade regimes with a view to enhancing developing countries’ exports in to the EU. GSP (Generalized System of Preferences): under its GSP the EU is currently granting unilateral tariff preferences to 178 developing countries. From the preferential imports under this regime, half are duty free and half at a reduced duty. EU imports under GSP amounted to € 68,2 billion. Among the GSP beneficiaries, The People’s Republic of China, India and Indonesia were the main exporters to the EU, with Bangladesh ranking 8th. However, with stagnating demand in the EU the current situation is bound to change, when EU populations come to terms that they no longer can afford the basic services they want. Therefore, in the final analysis, Europe’s slow growth, high debt, stagnant demand, and workers facing flat wages and high unemployment could force the globally economy into a whole new era.