Eurozone

Could Brexit be a unifying moment for Europe?

While Britain’s decision to leave the EU has been framed as a negative development for the integration process, some observers have argued that it could allow the other member states to pursue closer integration in the UK’s absence. Catherine De Vries writes that although previous crises have indeed generated significant leaps forward in European integration, the opposition evident in […]

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    Krugman’s argument that the Eurozone is not an optimum currency area could easily be applied to the US

Krugman’s argument that the Eurozone is not an optimum currency area could easily be applied to the US

In a recent conference, the distinguished economist Paul Krugman repeated the oft-heard critique that the eurozone is not an optimal currency area. Waltraud Schelkle disagrees with this characterisation, and argues that no country or group of countries represents an optimal currency area – one region or country always loses out from a single monetary policy. But countries can use […]

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    Closer fiscal integration is unavoidable if the Eurozone is to survive

Closer fiscal integration is unavoidable if the Eurozone is to survive

The fundamental flaws of the European Monetary Union can only be overcome by a drastic change in macroeconomic policies, according to recent research carried out by Enrico Marelli and Marcello Signorelli. They argue that in the long run, radical reforms at the Eurozone level are needed if the monetary union is to survive, although it is still admissible to […]

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    The UK deal with the EU explained: what it says and what it means

The UK deal with the EU explained: what it says and what it means

After a gruelling two-day European Council summit which saw the UK renegotiation top even the migrant crisis on the agenda, David Cameron and EU leaders finally agreed on a deal on the evening of 19 February. The British PM has expressed his satisfaction with the result obtained and announced a date for the referendum, to be held on Thursday, 23 June. […]

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    A double bind: Cameron urges non-discrimination in one policy area, while wanting to discriminate in another

A double bind: Cameron urges non-discrimination in one policy area, while wanting to discriminate in another

The UK government has entered the final stages of its negotiations with the EU. The issues of immigration control and the refugee crisis seem to overshadow the debate. Yet, as Waltraud Schelkle points out, the “Dear Donald — Yours David” letter of Prime Minister Cameron to European Council President Tusk reveals that the other leading issue is financial integration in a European Union with […]

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    What a fair relationship between ‘euro ins’ and ‘euro outs’ could look like

What a fair relationship between ‘euro ins’ and ‘euro outs’ could look like

The relationship between Eurozone members and non-euro states has been cited by David Cameron as one of the key issues in his attempted renegotiation of the UK’s EU membership. Nicolai von Ondarza writes that while some actors have proposed stronger blocking powers for non-euro states, a far better arrangement would be to simply give these countries the power to […]

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Britain’s risky euro-out strategy

In his letter to Donald Tusk, David Cameron stressed the importance of Eurozone and non-Eurozone members being on an equal footing. Iain Begg argues that this request is problematic. Among the issues raised, he writes that it would be a mistake to think that the interests of the nine member states that are out of the Eurozone are closely aligned and that […]

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    The Eurozone crisis has deeply eroded the EU’s accountability structures

The Eurozone crisis has deeply eroded the EU’s accountability structures

The Greek referendum highlighted an accountability conundrum: if a Grexit would have significant consequences for the future of the Eurozone, who should be consulted? Mark Dawson writes that this dilemma points at a wider problem within the EU’s accountability structures, which are riddled with paradoxes. He argues that, at least in the economic field, no legitimate structure for ensuring […]

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    Rumours of the euro’s likely demise are greatly exaggerated

Rumours of the euro’s likely demise are greatly exaggerated

To what extent do the problems illustrated by the Greek debt crisis threaten the future of the Eurozone? Iain Begg writes that while the prospects for Greece continue to be deeply uncertain, the wider reforms that have been pursued across the Eurozone since the crisis still give reason for optimism about the future of the single currency.

Since 2009, when […]

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    The absence of national adjustment tools is the reason why Eurozone countries continue to struggle

The absence of national adjustment tools is the reason why Eurozone countries continue to struggle

The Eurozone continues to experience low growth, while unemployment remains a substantial problem in several European states. Alison Johnston and Aidan Regan write that despite these issues, the European policy response has remained broadly similar since the crisis: reducing public spending and imposing structural reforms in periphery states to try and improve their competitiveness. They argue that there are […]

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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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The ECB rate cut was driven by the needs of Germany, not the needs of the Eurozone

Earlier this month, the European Central Bank cut its benchmark interest rate to a new low of 0.25 per cent, down from 0.5 per cent. Frances Coppola writes that the rate cut is unlikely to offer any help to the struggling economies in southern Europe. She argues that the rate cut was framed largely around the interests of Germany, and […]

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The euro complements Northern European economies more effectively than those in Southern Europe

Why has the Eurozone crisis affected Southern European countries more severely than Northern European countries? Benedicta Marzinotto writes that it is necessary for monetary and fiscal policies to complement structural factors within an economy, such as labour market institutions. She argues that the transition to the euro created problems for Southern European countries as the single currency’s macroeconomic regime was […]

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Europe’s austerity policies may have created less unemployment in countries with liberalised labour markets.

Austerity policies have been linked to rising unemployment in European countries, but what effect have policies aimed at liberalising labour markets had during the crisis? Alessandro Turrini finds that contrary to expectations, austerity policies may have been responsible for creating more unemployment in countries with stronger employment protection legislation. One potential reason for this is that while countries with more […]

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The fragility of banks in the Eurozone’s periphery means that proposals for a European wide bank resolution fund are likely doomed to fail.

Many countries used public funds to bail out struggling banks at the onset of the financial crisis. Now, with austerity still biting, the chances of further bank bailouts by national authorities are relatively slim. Clemens Fuest examines Internal Market Commissioner Michel Barnier’s recent proposals for the European Commission to take responsibility for bank restructuring and the creation of a European […]

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Brussels blog round-up for 20 – 26 July: Belgium’s new King, the UK’s new Prince, and a report card for Putin.

Chris Gilson takes a look at the week in Brussels blogging. The EU centre and the crisis Public Affairs 2.0 say that Europe’s industries are increasingly concerned about the reliability of energy supplies, given recent moves away from nuclear power and a lack of a comprehensive EU energy policy. Real Time Brussels looks at the often frustrating delays in the handing […]

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Economic divergences among Eurozone countries have played an increasingly important role in ECB decision-making since the start of the crisis.

Do national economic shocks, such as the debt crisis in Greece, influence ECB interest rate decisions? As Florence Bouvet and Sharmila King note, the ECB officially bases its decision-making on euro-wide data, rather than the situation in individual Eurozone countries. However, this ‘one size fits all’ approach may be inappropriate in cases where there are fundamental economic differences between individual […]

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Under the EU’s proposed Financial Transactions Tax, non-participating member states may bear the burden of deeper tax integration without reaping the benefits.

As a reaction to the financial crisis, in 2011, the European Commission developed a proposal for an EU-wide Financial Transactions Tax, with the purported aim of ensuring that the financial sector would contribute to the costs of the crisis. Christiana HJI Panayi looks at how these proposals have developed, and the use of enhanced cooperation between EU Member States, which […]

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The Cyprus crisis has shown the growing dysfunctionality of the eurozone.

Reflecting on the recent crisis in Cyprus, Vassilis Paipais and Eirini Karamouzi write that the imbroglio over the county’s banks shows both the difficulties currently faced by the eurozone and the power of Germany in Europe. They argue that the crisis has also brought to the surface real antagonisms over wealth inequalities in the eurozone, and warn that the increasing polarization between […]

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Cyprus is the latest casualty of Germany’s ‘one size fits all’ solution to the Eurozone crisis.

On Tuesday the Cypriot parliament rejected an international bailout deal aimed at keeping the country’s struggling banks afloat. The most controversial part of the agreement was a proposed €5.8 billion deposit levy on Cypriot bank deposits. Adonis Pegasiou writes that the agreement, pushed for by Germany, may create a precedent that will see a fall in confidence in other countries […]

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