Panel, Fireside Chat
The Future of Europe: Is Liberal Democracy in Trouble?
Milken InstituteAlec Russell, John Emerson, David Landsman, Lord Mandelson, Alexander Stubb, Peter Mandelson
- The Labour Party is expected to return to power, though not necessarily within four weeks of the next British election.
- Populism is driven by a convergence of five structural and cyclical factors: income gaps, sudden immigration movements, perceived corruption, financial crises, and the presence of demagogues.
- The Alternative for Germany (AFD) is projected to enter the Bundestag for the first time since the Second World War, with current polling at approximately nine percent and a limited ceiling in the low teens.
- AFD support is characterized primarily as a protest vote against the Chancellor's immigration policies rather than opposition to the Euro, though a surge in refugee arrivals similar to the summer of 2015 or 2018 could increase their numbers again.
- Future populist surges in Europe could also be triggered by an uncontrolled wave of terrorist attacks or the continued success of Russian propaganda and trolling on social media.
- In the upcoming French election, the gap between Emmanuel Macron and Marine Le Pen is expected to narrow, potentially reaching the 50 percent mark.
- Should Macron win the presidency but fail to secure a parliamentary majority in the subsequent National Assembly elections, governing will become difficult, though he may then dedicate more time to advancing European institutional and economic reforms.
- A Franco-German partnership is viewed as essential for driving European integration forward, with some observers suggesting Martin Schulz may be a less risk-averse partner than Angela Merkel, though both command significant influence.
- The German government adheres strictly to the "black zero" debt concept due to historical lessons from hyperinflation, despite recognizing Southern European views that fiscal constraints contributed to recent problems.
- A banking or sovereign debt crisis in Italy is identified as a significant risk that could force the EU into a difficult repeat of previous stabilization procedures.
- There is a perception that a currency union run fundamentally through political processes is subject to negative public perceptions of being a "dirty political game."
- Momentum for further European integration has stalled due to significant public fatigue, requiring mainstream politicians to abandon the defense of the status quo and address the impacts of the fourth industrial revolution on work and incomes.
- The European single market remains larger than the US and Chinese economies by scale, even without the UK, though the EU typically advances in phases of crisis, chaos, and suboptimal solutions.
- The Brexit process is expected to be a "nasty, brutish, and short" negotiation lasting just under two years, with the UK required to set an exit date by the end of March 2019, leaving it with no negotiating leverage.
- The UK government's pursuit of leaving both the single market and customs union is characterized as the biggest deliberalization of trade since the Second World War, with a hope to re-enter the single market via free trade agreement described as a fallacy that will not occur simply, quickly, or painlessly.
- Access to the single market requires accepting ECJ rules and regulations, which the UK claims it cannot do, creating a "lose-lose" scenario where the UK is projected to lose more economically than the EU.
- The economic consequences of Brexit are anticipated to unfold as a steady incremental decline over the next 10 plus years rather than an immediate catastrophe, accompanied by risks of a brain drain and rising unemployment.
- To address integration fatigue and the fourth industrial revolution, Europe must generate jobs and training to avoid economic stagnation where the middle class faces automation without stakeholder consideration.
- Saving the European project depends on France and Germany assuming leadership responsibilities to build strong institutions, while the UK and EU27 must resolve gaps in ideas and leadership to find a functional Brexit deal.