Europe, the battle move to the core – Italy and France versus Germany

Posted: October 9, 2014 in Uncategorized

Until last year the crisis was keeping everyone occupied and the main fault lines were mainly Greece. Ireland and Portugal (with a bit of Spain and Italy – but not centric to the issue) versus Germany.

And the small countries they knew they had no real chances against Germany.

Now that the main crisis is subsided, the political battle lines shifted to something more hidden from the media, but altogether more serious for Europe as involve the core.

France and Italy are asking less austerity and more pro growth position to Germany.

This is an altogether more complex issue.

Germany’s economy is slowing down as a triple whammy is happening: sanctions against Russia have a strong backlash as 40% of German’s company have deals with Russia. At the same time the slowdown of France and Italy starts to have an effect (France and Italy are two of main export markets for German’s good).

That puts pressure on Germany in economical sense, but at the same time the Euroskeptic parties are growing in power – so it is not easy for them to agree to leave austerity.

Italy is grappled by internal tension. It actually returned for the third time in recession and there is no improvement is sight and is asking for pro- growth measures.

France it is here the scariest as PM Hollande as minimal approval (13%) and already had to tell the Germans that the Budget will not be met (take or leave it). This month there is French Budget issue (the 15 October has to be submitted to the UE and the UE deliberates the 29 October- at this point it looks like the French Budget will not be approved). Anyway the tensions are heavy and Front National (anti Euro) would sweep into power if election would be held).

So this is a much more subtle crisis as the media are not talking much about it, but it is a mine ready to explode.

Italy is known for a lot of talks and no action, France is known for the French Revolution.

So better look more closely to the French.

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