Many staunch Europhiles will no doubt interpret the pound's drop against the euro as a signal that, as the rest of the European Union grows, Britain will be left behind. The news does make for stark reading if you are thinking of going on holiday to Europe. One pound can now buy you 1.08 euros, which is sterling's lowest level against the latter since 2009. The eurozone's economy has grown at 2.3 per cent, faster than the UK's at 1.7 per cent. Mario Draghi, the President of the European Central Bank, has hinted that interest rates could rise, something the Bank of England's Governor, Mark Carney, is reluctant to do.
Whilst the UK is tied to the EU for trade, this is part of the reason why Brexit Secretary David Davis wants to prioritise trade in October's negotiations. The European Council will decide that month if they want to include trade in the remit of its Brexit discussions with Britain. Perhaps now that the eurozone's economy is growing, they may see sense and agree to do so, but only because they would not want to jeopardise the latest growth figures. Yet when you consider the list of irrational decisions Brussels has made over the years, even this remains questionable.
Mr. Draghi needs to be careful
Mr. Draghi needs to be careful before he increases interest rates. It was only in June that the Italian banking crisis, escalated by italy's referendum last December on constitutional reforms and the resignation of former prime minister Matteo Renzi, reared its ugly head.
The EU was forced to issue 17 billion euros to rescue two of the country's oldest banks, Veneto Banca and Banca Poplaire di Vicenza. The European Commission's guide, which is a document that enables taxpayers to foot the bill when European governments bail out failing banks, has not been updated since 2013.
Sheer complacency
The Bank Recovery and Resolution Directive, which was approved by member states in 2014, enables 2 trillion euros to be poured into stagnating banks. The Bank of Italy's Deputy Director General, Fabio Panetta, has been urging the EU to update its banking rules for a long period of time, but they have ignored him.
This demonstrates their sheer complacency and lack of resolve in quenching these situations.
Domestically, government debt is 100 per cent of GDP. And if the Five Star Movement performs well in this year's elections, they will pull Italy out of the euro and shatter Europe's economic prospects.
These growth figures coming from the EU need to be taken with a pinch of salt. The whole European project is still at risk and it will be Italy, not Brexit, that will destroy it.
