Credit rating agencies received a great deal of criticism during the Eurozone crisis, but what actually explains the changes that occur in a country’s credit rating? Drawing on new research, Periklis Boumparis, Costas Milas and Theodore Panagiotidis write that ratings agencies have responded differently to low-rated and high-rated Eurozone countries. Regulatory quality and competitiveness have a stronger impact for low […]
Politically, the year 2017 looks like a minefield for Europe. Economically, however, the situation is much more promising: growth and inflation continue to accelerate and in the latest indices of economic surprises Europe has been faring better than the US, writes Alberto Gallo. ECB stimulus is starting to work, unemployment is slowly falling and consumer confidence is rising.
“Europe is […]
Paolo Gentiloni took over from Matteo Renzi as Italian Prime Minister in December, but the country’s politics remain volatile amid infighting within Renzi’s Democratic Party and calls from the Five Star Movement for a referendum on Italy leaving the euro. Miguel Otero-Iglesias highlights the widespread anger some voters feel toward the EU and Germany, but suggests that even if Grillo […]
IMF judgements on whether government austerity programmes can be successfully implemented are carefully followed by international financial markets. Markus Hinterleitner, Fritz Sager and Eva Thomann analyse the way the organisation has judged the credibility of austerity programmes in 14 European countries. They find that the IMF considers implementation credibility in its evaluations of austerity programmes, and uses these to […]
How should EU policymakers respond to growing Euroscepticism and the challenge posed to the EU’s future by Brexit? Harald Sander writes that while there have often been calls for more integration in the aftermath of crises that have hit the EU in the past, what is required now is a rebalancing of the desire of many citizens for more […]
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 […]
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 […]
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 […]
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. […]
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 […]
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 […]
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 […]
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 […]
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 […]
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 […]
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’ […]
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 […]
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 […]
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 […]
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 […]