Almost five years removed from the debt crisis that crippled much of Europe, the Eurozone is finally recovering, says European Commission President Jose Manuel Barroso. But fatigue over further financial reform and political instability within the European Union could stall any further progress.
Barroso, who sat down with TIME on Monday ahead of this week’s session at the United Nations General Assembly, described the European Union to be on the mend, boosted by rising investor and consumer confidence, while expressing optimism that the re-election of German chancellor Angela Merkel will benefit Europe.
The Eurozone remains shaky, especially considering the estimated 19 million people who are unemployed across the continent. Before this spring, the Eurozone economy shrunk in each of the previous six quarters. But recently, there are reasons to think that Europe is actually about to turn a corner.
On Monday, a private-sector report by Markit Economics showed that business activity in September increased to a 27-month high. Tourism has also picked up in many of the countries with the highest unemployment rates, especially those in the south like Spain, Greece and Portugal.
“The European economy has proven its resilience,” Barroso said. “Don’t forget that some time ago… many people were betting on the implosion of the euro.”
Over the last couple of years, many analysts predicted that the severe austerity requirements set by the EU, the European Central Bank and the International Monetary Fund would force Greece to leave the Eurozone. But you’re more likely to read about a Grecovery than a Grexit these days. And while a third bailout will likely find its way to Greece, Barroso said the country’s leaders have been making great efforts to restructure its debt, adding that Greece is close to achieving a balance surplus.
The reason the Eurozone has stayed intact, Barroso said, is because Europe — largely led by its dominant economy, Germany — showed enough political fortitude to keep the zone together. The many victories of Merkel’s party in Germany’s national elections over the weekend partly validated that, and he believes Merkel will pivot even further to Europe in a third term.
“Merkel will devote this third mandate, more time and energy, to Europe than before because it’s not likely she’ll run for a fourth mandate in German elections,” Barroso said.
Still, as the Eurozone economy shows signs of recovery, the EC president doesn’t see anti-EU sentiment waning. The past few years has seen the rise of populist political movements in various countries, all wary of the suits in Brussels. These include some strongly xenophobic, far-right nationalist groups, which Barroso suspects will still win support in the months ahead. “I expect them to grow to some extent,” he said, comparing some of the right-wing anti-European parties to the Tea Party in the U.S. “We see that when there is a difficult situation, unemployment going up, extremists forces, what we usually call populist forces, go up,” he said. “It’s almost mathematical when you look at it from a historical perspective.”
But even with unemployment remaining staggeringly high in the Eurozone’s southern economies, including Greece (27.6%), Spain (26.3%) and his own country of Portugal (16.5%), Barroso remains optimistic about the direction of Europe.
“We have now the first signs of recovery in Europe,” he said. “But it’s still a fragile recovery.”