The Euro, European economics, finance, business and regulation

You can’t get it all: Italy’s public finances

The Italian government will present its public finance projections by 10 April. Lorenzo Codogno writes that fiscal policy is expected to be strongly expansionary in 2016, but courtesy of flexibility clauses, the government will likely avoid entering into the EU’s so called ‘Excessive Deficit Procedure’ in May. He argues however that a fiscal problem looms large in 2017, while […]

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    Greece shows the flaws in pursuing a common monetary policy response to economic shocks across the EU

Greece shows the flaws in pursuing a common monetary policy response to economic shocks across the EU

To what extent is the Greek debt crisis a function of wider flaws in the design of the single currency? Bruce Morley writes that while Greece’s debt already exceeded 100 per cent of GDP in the 1990s, it is not simply the size of a country’s debt that determines whether it is sustainable. He argues that the real problems […]

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    The proposed EU Financial Transactions Tax is both illogical and likely to be economically damaging

The proposed EU Financial Transactions Tax is both illogical and likely to be economically damaging

In 2011, the European Commission proposed a Financial Transactions Tax (FTT) to raise revenue from the financial sectors in EU countries following the financial crisis. To date, however, only 11 EU states have so far agreed to implement such a tax. John Grahl and Photis Lysandrou write that while they broadly agree with the objectives behind the FTT, the […]

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    The lack of monetary sovereignty is not the reason Eurozone countries struggled during the crisis

The lack of monetary sovereignty is not the reason Eurozone countries struggled during the crisis

One of the most widespread arguments about the Eurozone crisis is that countries such as Greece, Spain and Italy have been hamstrung by their lack of monetary sovereignty and the ability to devalue their own currency. Deborah Mabbett and Waltraud Schelkle assess this perspective by comparing the experiences of Greece with Hungary, which does not use the euro, and […]

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    The ECB should focus on the threat of deflation rather than maintaining austerity

The ECB should focus on the threat of deflation rather than maintaining austerity

The European Central Bank will hold its latest policy meeting today. Ahead of the meeting, David Woodruff writes that while growth has resumed in the Eurozone, there are still serious problems across the single currency area, with unemployment at exceptionally high levels in several countries. He argues that the ECB’s primary focus should be on preventing deflation, and that […]

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    What has been agreed on banking union risks reigniting, rather than resolving the crisis

What has been agreed on banking union risks reigniting, rather than resolving the crisis

In December 2013 EU finance ministers negotiated an agreement aimed at establishing a banking union, with further talks between the European Parliament and the Member States ending in an agreement last week. Iain Begg provides a detailed overview of the main objectives of banking union and what has been agreed so far. He argues that while European leaders have […]

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Why the European Court of Justice should reject the German Constitutional Court’s ruling on Outright Monetary Transactions

Despite having a positive effect on the economic situation within the Eurozone, the European Central Bank’s Outright Monetary Transactions (OMT) program has proved controversial, with the German Constitutional Court in Karlsruhe recently deeming it illegal under EU law. Paul De Grauwe argues that the ruling reflects a serious misunderstanding of central banking on the part of the German Court, and […]

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Germany’s drive for Eurozone political union underlines the inadequacy of culture-based conceptions of integration

Throughout the economic and financial crisis, Germany has stood by the euro, contributing the most to the EU’s bailout programmes. At the same time, the country has continued its gradual rise to power. Anthony Salamone argues that Germany’s insistence on providing financial assistance on condition of political union in the Eurozone illustrates that European integration remains a question of states’ […]

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Cameron must learn from Merkel on the treatment of low-paid workers, the Financial Transaction Tax, and the banking system

Unlike other western politicians, Angela Merkel has weathered the recession with remarkable success. Richard Carr argues that Merkel’s Germany shows that governmental interventionism can be compatible with the Conservative tradition and offers lessons on how it might be usefully deployed by the British right. The economic crash of 2008 was not kind to the western political status quo. In the […]

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Investing in ‘pockets of excellence’ in periphery countries would help the EU address its lack of competitiveness

The outlook for several European economies has improved over the last year, following the deep recessions experienced across Europe during the financial crisis. Terence Tse and Mark Esposito write that while there has been some progress, the key problem in EU states is still a lack of competitiveness. They argue that promoting investment should be a key priority and that […]

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By altering workplace power relationships and employers’ incentives, minimum wage laws help ensure social equality

Egalitarian liberals have long been sceptical about a minimum wage, arguing that taxation and transfer programs are better at ensuring distributive justice. But even if we accept the claim that the minimum wage increases unemployment, there are grounds for the minimum wage on the basis of justice. Brishen Rogers argues that it helps reduce work-based class and status divisions. Labour […]

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François Hollande will require a more detailed and far-reaching economic strategy if he is to turn France’s ailing economy around

Like many countries across Europe, France has suffered economically since the beginning of the financial crisis. As Andy Langenkamp writes, French President François Hollande’s recent ‘responsibility pact’ outlined a number of reforms designed to restructure the economy, making it more competitive in the long-term. He argues that while Hollande has the political resources required to implement bold reforms, his current […]

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Public spending cuts in Spain have been more severe in those areas under the control of regional governments

Spain has pursued an austerity programme as part of its response to the financial crisis. Jacint Jordana compares spending cuts in areas under the control of regional governments, including the bulk of health and education spending, with areas controlled at the national level, such as pensions and welfare. He argues that due to a 2009 law on decentralised public finances, […]

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Despite the crisis, the euro has more than doubled trade among Eurozone members

The Eurozone crisis has raised doubts about the rationale which underpinned the creation of the single currency. Tal Sadeh writes that despite early difficulties in accurately quantifying the trade benefits brought about by the euro, recent research shows that it has more than doubled trade among its member states. Moreover, while the Eurozone crisis has created more substantial problems in […]

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Europe’s ‘structural reform’ agenda is little more than a fairytale

The policy response to the Eurozone crisis has incorporated a number of different elements, including the structural reform of European economies. Aidan Regan argues that this ‘structural reform agenda’ has been defined in exceptionally vague terms, and that it is still unclear precisely which reforms would lead to tangible economic improvements in European countries. He writes that with the European […]

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Why the world needs more globalisation, not less

The perceived negative effects of globalisation have frequently been the subject of criticism and political opposition. Jason Sorens writes that much of this scepticism toward globalisation is misplaced. He argues that social scientists have a responsibility to tackle the ‘anti-foreign’ and ‘anti-market’ biases that underpin many of these perspectives, and that removing trade restrictions such as agricultural subsidies should be […]

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EU funding policies may be undermined by regional authorities using structural fund allocations to win votes at the local level

More than half of the EU budget is dedicated to Structural Funds, which are allocated across EU regions with the aim of promoting economic and social development. Lisa Dellmuth, Michael Stoffel and Dominik Schraff write that the use of decentralised authorities to allocate structural funding can create substantive problems for the EU’s policy goals. They illustrate that the distribution of […]

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The EU’s attempts to manage air transport regulation illustrate the extent to which supranational actors can send credible signals to financial markets

How can European policymakers send credible signals to financial markets? Christian Rauh traces market responses to the announcements and events during the Commission’s nine-year conflict for competences in international air transport regulation. He finds that judicial strategies and European Court of Justice proceedings sent the most credible signals for regulatory change to financial markets, adding evidence to ‘institutionalist’ views of […]

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Despite high employment rates, Germany is also experiencing increasing poverty among its citizens

While Southern European states have experienced intense economic problems since the start of the financial crisis, the German economy has generally been viewed as comparatively healthy. Mark Esposito argues that beyond positive figures such as the high rate of employment within the country, Germany is not the robust model of economic health which it has been portrayed as. He notes […]

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The state of the UK economy: Diagnosis, prognosis and recommended treatment

The UK economy has experienced a prolonged period of weakness over the last five years. John Van Reenen writes that the real problems for the UK are inadequate long-run investment in infrastructure, innovation and human capital. He argues that what Britain needs is an independent infrastructure body to recommend and deliver national infrastructure projects. Unfortunately, short-term expediency has once again […]

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