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Some astonishing facts from Europe

These come from Niall Ferguson's Bradley Lecture at the American Enterprise Institute earlier this month:

Today, Germany accounts for around a quarter, a little under a quarter, of the combined gross domestic product of the entire European Union. It accounts for just over a fifth, 22 percent, of its population. It accounts for 16 percent of the seats in the European Parliament, and around about 11 percent of votes on the Council of Ministers, though that process of voting is, of course, under a process of reform. (In fact, if the draft treaty isn't enacted after enlargement, Germany's share of votes in the Council of Ministers will fall to 8 percent.) But if you look at net contributions to the European budget in the years 1995 to 2001, Germany contributed 67 percent.

So the Germans get between 8 and 11 percent of the decisive votes in the Council of Ministers, that is, the key decision making body of the European Union, but they contribute two-thirds towards the combined budget.

These figures are incredible, and probably unsustainable. Ferguson continues:

Now, that's all very well, ladies and gentlemen, if Germany is the fastest growing economy in Europe. But as I've already pointed out to you, it is today the slowest growing economy in Europe. It is, in fact, the sick man of Europe. And although the German economy is very large, it is far from clear why, when it has not grown at all in the past six quarters, that economy should continue to subsidize the economies of the smaller, poorer countries of Southern and now also Central Europe.

My estimation, ladies and gentlemen, is that the train is still running, but there ain't no gravy anymore. And as that reality gradually dawns, the process of European integration, which I believe has depended from its very inception on German gravy, is bound to come to a halt.

While I don't agree that integration will halt, Ferguson is probably right that integration is unlikely to remain on these terms. As he points out earlier in the talk, the economic gains from integration are surely the primary driving force. German subsidies have been part of the price paid for achieving these gains. The political challenge remains immense, but so are the economic benefits from integration, which are widely shared. Via Crooked Timber.