I see that the French President, Francois Hollande, has stated that the crisis within Europe is “now over.” Non. These were written on the back on an envelope recently and I’ve made no attempt at driving forces or a matrix, but I quite like them.
Scenario 1. Disorderly collapse
Growing inequality brought on by unemployment and income polarization create civil unrest and extreme nationalism aimed primarily at anyone that is not seen as being part of the group (i.e. local). Taxation and fines widely seen as unfair make matters worse. Outward migration rises (especially of younger people) while the impacts of rapid ageing start to be felt. The result is that EU competitiveness declines, which together with a flight from the Euro leads to a break-up of the European Union. The German economy goes into a nosedive as exports within former EU region become prohibitively expensive.
Scenario 2. Muddling through
Without tackling any of the fundamental issues such as competitiveness, the EU project carries on with token concessions to the growth agenda reducing the impact of austerity measures. The ECB muddles through, soothing the impact of various country debt dramas. Economic performance and competitiveness is variable, but generally sluggish and the US, China, India and Russia and others start to bottom feed on various EU assets fuelling an inevitable local backlash.
Scenario 3. Greater unification exposes differences
The EU attempts to stabilize itself by expanding geographically and by attempting to increase economic and social integration. However, expansion and unification merely expose fundamental differences between the European north, south, west and east. Migration into key member states increases exposing hidden tribal and xenophobic tendencies. Things carry on for years, but eventually the project collapses under its own bureaucratic weight.
Scenario 4. Smaller but stronger
Following the national bankruptcy and EU exist of (select one or more from the following: Portugal, Italy, Greece or Spain) and the virtual exit by the UK, a new union is created by France and Germany with Benelux annexed. This results is a more dynamic union with greater fiscal and social unification, although disagreements persist.
Scenario 5. Accidental winner
Serious US and Asian economic problems, most notably in China, result in the Euro replacing the US dollar and aspirant Yen as the international currency. This results in inward investment, economic growth and a fall in unemployment across the region. Long-standing disagreements and structural difficulties are forgotten.