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The Eurozone Economy’s Coming Downturn

Until recently, the prevailing narrative in Europe was that the economic crisis was over. But there are signs that the eurozone may be facing an economic slowdown – a development that could change significantly the discourse leading up to next May's European Parliament election.

MILAN – Next May’s European Parliament election is likely to be haunted by Europe’s inner demons, from the clash with Italy’s populist government over its budget to the xenophobic front that has formed in the Visegrád countries. The crisis of the traditional centrist parties, which have been essential to building and maintaining consensus in the European Union – even as they have struggled to implement needed reforms – is also far from resolved. But if, as current indicators suggest, Europe is facing an economic slowdown, the pre-election discourse could change significantly.

Until a few months ago, the prevailing narrative was that the economic crisis was over, even for the hard-hit countries of the eurozone’s periphery. As a result, Europeans had shifted their attention to other issues, such as refugees and security, that were threatening political stability and eroding consensus for the European project.

But GDP growth in the eurozone has been slowing since its peak in the third and fourth quarters of 2017. The persistent weakening of the eurozone economy – even in Germany, GDP contracted in the third quarter of 2018 – does not bode well for the EU, which could be facing twin political and economic crises.

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