Recent figures from Eurostat show that the Eurozone emerged from its recession in the second quarter of 2013. Harald Sander argues that while there are some ‘green shoots’ of recovery, the Eurozone crisis is far from over. He notes that there are still a number of key challenges to be overcome, with Eurozone unemployment levels and debt to GDP ratios […]
“Berlusconi scandal” talk has inflated the Italian cost of borrowing over and above the impact of economic fundamentals
Have former Italian Prime Minister Silvio Berlusconi’s scandals and court cases had a significant effect on the cost of Italian borrowing? Costas Milas and Gabriella Legrenzi assess the impact of “Berlusconi scandals” on 10 year Italian bond yields by using data from Google search queries as a proxy for interest in Berlusconi’s troubles. They find that over the last four […]
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 […]
There is a significant divide in how countries of the Eurozone’s north and south react to changes in monetary policy.
The European Central Bank (ECB) is charged with maintaining price stability across the Eurozone, which it does via its monetary policies. While the euro has had some success in smoothing out the asymmetries within the Eurozone, Matteo Barigozzi finds that when the ECB changes monetary policy, the Eurozone’s southern countries experience fluctuations in prices and unemployment outside of the Eurozone’s […]
In past decades, the International Monetary Fund has had a potent reputation, especially in the developing world. In its programmes in Europe, however, the IMF has had to take a back seat to the desires of the European Commission and the European Central Bank, whose policies have thus far been less than successful. In light of this, Sony Kapoor makes […]
Philippe Van Parijs argues for a basic income for all legal residents of the European Union to be financed by Value Added Tax. Unlike the US, the EU lacks automatic inter-state transfers and migration between states is much less common. A universal basic income would serve as a buffering mechanism and enable a stronger recovery from economic downturns. It would also help […]
The growing economic and ideological breach between Northern and Southern EU countries is pushing Europe towards a perfect storm.
Southern European countries have been hardest hit economically by the Eurozone crisis. Using Eurobarometer data, Sonia Alonso notes that this economic disparity has also had a significant effect on public attitudes. Citizens in Southern European countries now have substantially less trust in government, trust in political parties, and satisfaction with democracy than those in the North. She argues that allied […]
David Cameron has promised to hold a referendum on Britain’s EU membership in 2017. Costas Milas argues that talk of an exit from the EU has been a hugely unnecessary distraction that has led to economic uncertainty and higher borrowing costs. He shows this by plotting the 10-year UK yield together with the Google trends search queries index for “Brexit”. Policymakers […]
The DGB’s proposals for a new ‘Marshall Plan’ for Europe may mark the beginning of a discussion on the concrete alternatives to austerity.
For nearly five years, austerity has been touted as the only way to tackle the effects of the Eurozone’s financial crisis. Steve Coulter profiles a new initiative from the German trade union confederation, the Deutsche Gewerkschaftsbund, which aims to leverage Europe’s idle private capital via a ‘European Future Fund’. This fund would focus on green investment, as well as training, […]
In comparison to the rest of Europe, Poland has experienced stand-out economic performance since the beginning of the economic crisis in 2008. However, Gavin Rae warns that this performance is largely based on the Polish government’s ability to leverage funding from the EU. With a declining EU budget that now focuses on innovation over infrastructure, as well as increased budgetary […]
Do house prices influence consumption patterns? The economic crisis has led to a slump in both the price of houses and in consumption, meaning that any link between the two is of great interest to policy-makers who wish to kick-start consumption in order to reinvigorate growth in Western economies. New research from Martin Browning, Mette Gørtz and Soren Leth-Peterson attempts to find […]
The UK’s Spending Review has been forced on the British Chancellor because weak economic growth has blown a hole in the deficit reduction programme. John Van Reenen welcomes the partial reversal of the hugely damaging cuts in public investment, but argues that it is too little, too late. Rock bottom interest rates mean the UK should be boosting investment substantially now. […]
The ability to eat cheaper home-cooked meals more often might explain why people appear to spend less money after retirement.
A number of studies suggest that those who have retired spend significantly less money than those who are still working. This might imply that many people have insufficient savings for retirement. Using data from Spain, Maria Jose Luengo-Prado and Almudena Sevilla-Sanz take issue with this perspective. Noting that much of the reduction in spending is related to food expenditure, they […]
In its efforts to tackle banking crisis and avoid a bailout, Slovenia is now facing a crisis of democracy.
In recent months, many commentators have turned their attention towards Slovenia, with some predicting that the country may soon need to request a bailout from the ‘Troika’. With this in mind, Slovenia’s government has moved to push through a package of tax increases, public sector pay cuts, privatisations and bank reforms. Nicole Lindstrom argues that while the government’s reform agenda […]
The connection between fiscal and monetary policy is currently under scrutiny by the German Constitutional Court in the context of the European Central Bank’s (ECB) Outright Monetary Transactions bond-buying programme. Paul De Grauwe and Yuemei Ji argue that most analyses are deeply flawed by the misapplication of private-company default principles to the central bank. ECB bond-buying transforms public bonds into […]
The UK government adopted tax campaigners’ rhetoric at the G8, but much of the status quo remains intact.
Martin Hearson argues that while David Cameron will receive a significant political boost from the media portrayal of his global leadership on tax evasion, nothing agreed at the G8 is in itself likely to make a big difference to tax haven secrecy or to developing countries. Importantly, there were no commitments on public registers for beneficial ownership. The Enough Food for Everyone […]
Five minutes with Mariana Mazzucato: “We have socialised the risk of innovation but privatised the rewards”
The public sector is often seen as sclerotic and conservative in contrast with a dynamic and innovative private sector. This assumption lies at the basis of much of the outsourcing of public services to the private sector. In this interview and her new book, Mariana Mazzucato argues against this assessment and in favour of state-led innovation and economic growth. She […]
The second Greek rescue programme was not merely late, but also insufficient, making a third programme inevitable.
Last week the IMF published a review of the financial assistance given to Greece during its debt crisis. One of the key limitations identified in the report was that debt relief for the country was provided far later than it should have been. Waltraud Schelkle writes on the fallout from the report, which generated angry responses from both the European […]