Mr. Dan O'Brien:

I will look at five trends that seem to be most relevant to the future of Europe. These are the rise of Germany, the marginalisation of Britain, the widening of the north-south gap, the widening of the EU legitimacy gap and the euro crisis. The German question has been at the centre of European politics since Germany was reunified in the 1870s. It went away for a long time in the post-Second World War period and it has now returned. Germany has the largest economy in Europe and, although it has its problems, it is arguably the most fundamentally sound of the big G7 industrialised economies. With the enlargement of the EU, its geographic centrality is more important than ever. As the decades passed, the period of time when Germany did not conduct a normal foreign policy seems to have passed. That is most noticeable in terms of the decline of the Franco-German relationship, which had given France a leveraged position in Europe. The breakdown of the Franco-German relationship, particularly since the change of Government in Paris last year, is indicative of that very big change. Many people are concerned that the rise of a dominant power will upset the balance of power in Europe. It seems a bigger risk is not an over-assertive Germany but an under-assertive Germany and an unwillingness to provide the leadership its economic and political clout gives it. A vacuum, in any situation, can cause or poses risks and dangers.

Anyone who saw the Harris poll last week can see that it looks like the momentum in British public opinion towards moving away from Europe is irresistible. There are deep historical reasons for the scepticism of the British public. All opinion polls over a long time show levels of euroscepticism among the public are among the highest, if not the highest, recorded.

Excluding a eurosceptic media, as someone who lived in Britain for ten years and as someone who has lived in five other European countries, the level of antipathy towards European integration in Britain is much higher and deeper. The Murdoch press does not explain that. It is something that goes much deeper historically.

Many people are of the view that it would be good to have a referendum debate. The few pro-Europeans who are left feel it would be a good idea to have a referendum because it would allow pro-European forces to come out and have the debate and deal with the euroscepticism and misinformation that comes from that side. I am not convinced by that argument. The Conservative Party has almost no pro-Europeans left in it, the Labour Party does not really care about Europe anymore, the trade unions are less relevant and have never been particularly pro-European, the City is ambiguous, particularly in the context of banking union, and business is divided, with many small business people believing that whatever gains there are from trade integration are outweighed by the additional cost of red tape from Brussels. It is not clear to me that elite opinion is in favour and the debate might turn out to push public opinion further down the eurosceptic route.

Mario Monti once said people in Europe have been too polite to each other. That certainly strikes a chord with me, having lived in Brussels for a period. People were afraid of being accused of labelling other people according to national stereotypes. That often led to an unwillingness to be as frank with each other as might have been necessary. That has changed. The manner in which Angela Merkel and Nicolas Sarkozy smirked about Berlusconi when asked about him at a press conference seemed to be a clear indication that sort of politeness was finished and people were speaking more aggressively to each other.

The crisis has thrown up a huge number of problems, such as the difference in political capacity between the north and the south, particularly Greece, but also Italy to an extent. There is a difference in policy priorities, vested interests are taken on differently and market liberalisation and economic performance are viewed differently. One of the things that has not come out into the public domain from the economics profession is the concern that long-term economic growth in the developed world is grinding to a halt. Rates of economic growth per capitain the last 50 years have slowed in most developed economies, to a halt in many cases, such as Portugal and Italy. This opens a division between the north and south of Europe that is both political and economic, which adds further strains.

The legitimacy gap is also widening. The Eurobarometer report asked people in different countries the extent to which they believe the EU is a good thing. Comparing results in 2007 and 2012 for those who say it is good and those who say it is negative, in Ireland and Spain the net change has been -32 points, while in Portugal and Italy it has been -28 points, and in Greece -25 points, with an EU average in 2012 of only 31% of people believing the EU was a good thing. Many observers point to the fact that national political systems have also registered declines in satisfaction among respondents in opinion polls and while that is true to an extent, voters have a chance to vote out their governments but no chance to vote out the European Commission or the ECB, so there is a major difference between the two.

The ECB is the only institution where there is a genuine democratic deficit. Its independence goes so far that it is unaccountable. It is nominally accountable to the European Parliament but the European Parliament cannot do anything in real terms, unlike Westminster and the Bank of England, for example, or Congress and the Federal Reserve. The only way anything can change for the ECB is for an intergovernmental treaty to change its structures. Given the difficulty of achieving that, it is not a realistic stick with which to hold the ECB accountable and that poses a risk in the long-term for the legitimacy of the Union.

The euro crisis has emphatically not gone away. The ECB's outright monetary transactions programme that was announced six months ago has dealt with a serious problem of liquidity but it has not dealt with solvency issues. We see nominal GDP in three of the southern European countries falling and debt levels rising so the debt dynamics are looking dangerous. Italy's public debt is now likely to be around 130% of GDP when the general view is that above 90% affects economic performance and above 120% is dangerous. It is now at 130% and rising, posing a real risk to the country's solvency.

Has enough been done to deal with that? There has been some progress on banking union but no progress on fiscal union and no likelihood of any progress, so it is a matter of time before the crisis blows up again and we are back to square one.