Here are two countries you don’t hear about too often, Norway and Switzerland. With some predicting that the euro has only months left, the media has been heavily focused on the Eurozone and the European Union’s Fiscal Compact. With all of the attention focused on the European Union and its attempts to salvage the euro, it is worth taking a moment to look at how the European countries that have not joined the European Union and the Eurozone are performing.
Government debt has been one of the major driving forces behind the European crisis. Italy, Greece, and Ireland are suffering the consequences of years of fiscal irresponsibility particularly badly. Italy’s debt stands at 136% of GDP, while Greek debt stands at almost 179% of GDP. Irelands national debt is a bit lower at 108% of GDP. Although government spending was not the primary reason for Spain’s economic woes, government debt is likely to stay well above 70% of GDP in 2012.
Unemployment rates amongst the same Eurozone members are shocking. Greece has an unemployment rate of over 20%, with some parts of the country experiencing rates as high as 60%. Ireland has an unemployment rate of 14.5%. Italy has slightly better figures, with an unemployment rate of a little over 10%. Spain has the most notable unemployment rate, with over 50% of the young labor force out of work.
Switzerland has an unemployment rate of 3.1%. Norwegian unemployment is at similar levels with 3% unemployment. Additionally, government debt in both Switzerland and Norway is about 50% of GDP (pretty good by European standards). Outside of the EU and the Eurozone Norway and Switzerland have managed to isolate themselves from many of the problems in the rest of Europe.
The Iron Lady warned of the dangers of a single currency and a European Central bank. She rightly pointed out the political motivations behind the project, and how political autonomy would be eroded as a result. The founders of the euro pledged that a single currency would bring prosperity to Europe. The experiment has backfired spectacularly. However, despite the evident danger of close fiscal union the proposed solution from Brussels is to move towards an even closer union, with the banking sector unified under a single set of regulations and legislation. To look at the examples of countries like Norway and Switzerland would be an admission of failure, something anathema to the culture of the European Union.