Silvia Merler

The biggest, and stupidest, myth in European politics, particularly popular in France, is that Europe suffers the consequences of "austerity" and "neoliberalism". In the biggest 5 countries in Europe, more than half of the population makes its income from the state, less than half from the private sector. This is what makes the problem of reducing the welfare state so impossible: more than half of the voters are net recipients. No surprise that Italy's budget has not been balanced in 100 years, France's in 50 years (ooh la la, l'austérité!!): -France: 30 million from the state versus 21m private sector workers. State spending is 57% of GDP, taxes more than half the economy. The budget hasn't been balanced in the lifetime of most French (since 1974). - Germany: 35 million adults from the state, versus 34 million from the private sector. 10% of the population is registered as severely disabled. Public spending is over half of GDP. Germany has had a continuous budget deficit since 2019. -Italy: 23 million from the state, versus 20.5 million private-sector workers. Public spending is 51% of GDP. Italy has had a budget deficit every year since 1925, for 100 years. - Spain more people get their income from the state since 2024: 18.21 million from the public sector versus 17.9 million people working in the private sector. Since 2025, Spain also had more government employees than self-employed workers (autónomos) for the first time in history. State spending is at 45%, budget has not been balanced since 2007. - UK: 54% of households now receive more in state benefits than they pay in taxes. State spending is 44.5% of GDP, taxes (40%) are at their highest since 1950, the budget hasn't been balanced since 2001, and 1 in 5 new cars is paid by the government through a bizarre state disability scheme (Motability).

🚨 BREAKING: The European Commission has urged people to work from home, drive and fly less, and for EU countries to urgently roll out renewables, as it warned of a prolonged energy crisis as a result of the conflict in the Gulf. Full story: politico.eu/article/european…

The debate on the Euro is shifting. A growing number of mainstream economists point out that ECB backstops for high-debt countries put debt on an unsustainable path. That shouldn't need saying, but in the Euro zone it does. The ECB needs deep reform and must exit debt markets...

There's first signs of contagion from France to Italy and flight to safety into Bunds. Italy is the Euro zone Achilles heel. Without it, ECB could let French yields rise, helping France get its budget under control. But that's not possible with Italy always on the brink of crisis

🇫🇷🇮🇹 Even worse when your benchmark is Italy. 10-year BTP-OAT spread tightest in 20 years.