Will the European Economy Share the British Bulldog’s Ill Fate?

Image relative to politic relationships between Europe Union and United Kingdom. National flags on concrete textured backdrop. Brexit theme

The English bulldog is one of the most popular dog breeds in the world. Its characteristics are the product of centuries of selective breeding.

They were first bred for bull baiting, hence the name. Their ferocity and pain insensitivity traits were ideal for this sport. But once the government banned it, the ferocity trait was eliminated.

Yet the English bulldog is also known to be one of the unhealthiest breeds in the world. They suffer from genetic health problems, including respiratory and skin diseases. This is why their life expectancy is short, around 8 years.

You see, the gene selection has been reducing the breed’s genetic diversity. And deteriorating its health for years. It now seems that the breed has reached the point of no return. That is, the breed cannot revert all the health problems they have with their existing gene pool.

So the English bulldog has two options. It can either live with its poor health and short lifespan or mix with other breeds and decrease its purity.

Like the English bulldog, Europe has also spent centuries shaping and perfecting its current political and economic union. Yet it also suffers from many political and economic ailments.

Among the political, Europe’s recent terrorist attacks have had negative consequences, especially for tourism. Plus the recent refugee crisis and immigration problems are favouring the rise of the political right wing.

Economic problems also go in deep.

The size of the EU’s economy as a percentage of the world’s economy has been shrinking. In 1980, the EU’s GDP based on PPP as a share of the world was 30%. By 2015 it had almost halved, to 16.9%. That is, the world’s economy has been growing more than the EU has.

GDP Based on PPP Share of world

Source: IMF World Economic Outlook April 2016


EU’s economy has not been doing well since the global financial crisis in 2008. It seems like the economy has not recovered from that large shock and it is having trouble growing.

Now the EU faces a new economic shock and slowdown, with the upcoming Brexit.

To boost growth it has been maintaining interest rates low for years. Yet even with negative interest rates, inflation is non-existent.

And all that cheap debt is now ballooning to unsustainable levels. General gross debt has spiked since the GFC in 2008.

General Government Gross Debt

Source: IMF World Economic Outlook April 2016

Take a look at the chart below detailing national debt in EU countries in the 4Q 2015 in relation to GDP. Most countries have leapt over the 60% region.

Greece, Italy and Portugal may be heading the charge. Yet EU leaders like UK, Germany and France are not far behind. In fact, the debt to GDP ratio for the EU area is a whopping 90.7%.

National Debt in EU countries

Source: Statista.com

And the austerity measures have increased unemployment figures. EU’s overall unemployment is 10.1%. Greece is once again at the top of the list with 24.1%. And Spain follows at 19.8%.

Is it worth continuing in the current track? Unless the EU starts reforming the current system or taking different measures, how long will it take till it reaches the point of no return?


Selva Freigedo,
For The Daily Reckoning

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Selva Freigedo

Selva Freigedo

Selva Freigedo

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