Political Tensions, Not Just Brexit, Could Leave Europe Vulnerable To Economic Decline

Brexit by German index
A TV screen is seen next to the German share prize index DAX board the day after the Brexit deal vote of the British parliament during trading at the stock exchange in Frankfurt, Germany, January 16, 2019. (Photo: REUTERS/Kai Pfaffenbach)

The world is bracing for a global economic decline that the World Bank predicted earlier in January. An expert commented that if there is a specific region that could be largely affected by the decline, it would be continental Europe.

Veteran journalist and author of "The World in 2020," Hamish McRae wrote on The Independent that the European economy is experiencing stagnation but the dilemma should not be blamed entirely on Brexit.

McRae pointed out that while Britain's exit from the European Union (EU) has had an impact on the eurozone's slump, political tensions brewing in other European states may also be affecting the continent's economic slowdown.

One of the EU states that have been in the middle of economic and political debates in Italy. Earlier this month, the country slipped back into recession just four years after the previous recession that it experienced.

Aside from Italy, some economists are also concerned about Germany's import issues. The country falls short of importing while it focuses on selling products to the rest of the world. McRae noted that this has led to tensions between Italy and France.

Furthermore, McRae said Europe's vulnerability to economic decline could be because of the union's overall failure to provide the general public with higher living standards. He added that a lot of the European people feel that they're at a disadvantage in terms of lifestyle.

For McRae, the European economy should provide its people with more developments to help reduce the impact of a potential global economic slowdown this year. He recommended that Germany should try to cut taxes and invest in infrastructure. The European Central Bank can also inject more cash into the economy.

Meanwhile, the Dutch government reportedly said it is currently in talks with over 250 firms before Brexit takes place on March 29. The agenda is to see if there are better options for Dutch businesses to move their operations from the United Kingdom to the Netherlands.

According to The Guardian, the Dutch economic affairs ministry said 1,923 jobs and around 42 companies have been lured from the British market last year. These companies include Bloomberg, Sony, and the Discovery Channel.

"In 2019, several companies including Discovery and Bloomberg have already announced their intention to invest in the Netherlands because of Brexit," the ministry stated.

It is worth noting that Panasonic has already moved to the Dutch capital while rival company Sony announced in January that it will move its European operations to Amsterdam.

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