Is there light at the end of the tunnel for Europe? The latest economic figures suggest the eurozone has finally emerged from its 18-month recession. Could these be the first signs of a tentative recovery? The Greek Prime Minister, Antonis Samaras, insisted earlier this week that the worst of the crisis was almost over for his country. He joins a growing chorus of optimism alongside French President François Hollande, who declared earlier this year: “The crisis in the eurozone is over”.

Despite some positive indicators, however, there is still good reason to be cautious. In his State of the Union address yesterday, European Commission President José Manuel Barroso made it clear he believes the crisis is still ongoing, and he still drew criticism from MEPs for being overly-optimistic.

During his speech, Barroso argued that things can never go back to the way they were pre-2008, before the recession hit. He believes the global economic and political order is changing, as is Europe’s place within it:

Some people believe that after this everything will go back to the way it was before. They are wrong. We will not go back to the ‘old’ normal; we have to shape a ‘new’ normal.

In general, our commenters on Debating Europe seem much less optimistic about the prospects of recovery. In our recent debate on youth unemployment, Samo left a comment suggesting he felt the economy would only start to recover “five years from now”, and he worried this would leave a “lost generation” of unemployable young people who were too inexperienced (and over-educated) to find work.

Yesterday, we spoke to Nikos Chrysoloras, EU correspondent in Brussels for the Greek newspaper Kathimerini. We asked him if it was too early to declare the crisis over:

chrysolorasThe crisis does seem to be bottoming out, at least in many European countries. But Barroso was right in saying in his State of the Union speech that this was not a cyclical but a structural crisis, and it has been made dramatically clear the limits of our credit-based growth model.

The fact is that we used borrowed money to compensate for losses in productivity, creativity and innovation in Europe. In the case of Greece, it was the state that was borrowing to fuel growth, but in the rest of Europe – in Ireland, or Spain, for example – it was the private sector. In this way, we gradually buried ourselves under a mountain of debt.

So, there are deeper reasons that caused the crisis, and a slower pace of fiscal consolidation, lower interest rates, or using monetary means to solve the crisis will not do the trick. The real problem for Europe is our aging population; our limited access to natural resources; our energy dependency on Russia; our inability to project power on a global scale; the fact that Europe is a laggard in terms of research and development, even compared with emerging economies; the poor performance of European universities compared to American universities. And if you don’t cure the roots of this disease, any recovery fueled via monetary means or expansionary fiscal policies will be short-lived and doomed to failure.

So, I think it’s too early to say the crisis is behind us. We still need to address the roots of our crisis so we can find a way to protect our unique social model. And the only way to protect this unique social model is to produce enough wealth to do so.

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IMAGE CREDITS: CC / Flickr – erpete

33 comments Post a commentcomment

What do YOU think? Is there light at the end of the tunnel for Europe's economy? Is the worst of the crisis finally over? Or are there deeper roots to the crisis that haven't yet been tackled? How long do you expect the crisis to last? Let us know your thoughts and comments in the form below, and we'll take them to policy-makers and experts for their reactions.

  1. avatar
    Gigi Alexandru Muresan

    The light at the end of all Europeans citizens can be only the Heaven light cause the hell is what we are living right now all over this joke that you call E.U. !

  2. avatar
    Christos Mouzeviris

    Deeper roots of course.. Deeply rooted in our economic social and political system. Ultra liberal Capitalist and post Regan-Thatcherite.. Who controls the rating agencies and the markets? Why the banks have so much power, more than they should? Under what criteria do they rate countries? The economic model that we follow and dominates the world is the Anglo-Saxon.. Countries with that cultural back-ground are doing well.. The rest of us must adapt to what they dictate or face the stereotypical portrayal of being lazy and corrupt..

  3. avatar
    Karel Van Isacker

    The EU is at the root of the problem since it doesn’t tackle the actual problem in order to please and apease its financial sector.

  4. avatar
    Diogo Marques

    LOL Crisis over… The crisis will never end as long as the over powerful financial institutions are making profits, they profit with the situation the EU is in, so why should they stop it.

  5. avatar
    Jovan Ivosevic

    That depends on what happens on 22 Sep in Germany. Does Merkel stay or does she go? Pretty much answers the question. Right now it looks like she stays, and therefore there is no light at the end of the tunnel.

  6. avatar
    Yo Lou

    Stop giving Money to rich people, banques and so one and let people have their jobs and europe will be the richiest continente of the world

  7. avatar
    Salih Babacan

    The future is Europe is totally dark. There is nothing at the end of the tunnel, but darkness. Young population especially at the age of working is continuously decreasing. Depts are increasing rapidy. Saving operations for Greece melted 200 billion dollars of Europe and that money came out of the pockets of EU citizens. As a result the ship is sinking.

  8. avatar
    Eric B.

    No it is not over, as the latest data on the industrial production shows. Even in Germany, the pace of growth is slowing down again. The German “powerhouse” is relatively weak, compared to the US or Japan

  9. avatar
    Limbidis Arian

    HA! “over”? It will be over when the rich bastards who robbed us blind are DEAD or imprisoned.
    Until then nothing is “over”. What? We jsut bailed them out and now it’s “business as usual” ?!

    The nerve ! We got half the EU is RUINS and in worse economic state than after WW2. And you call this “over” ?

    • avatar

      The rich are doing well again, and bankers too. They’re the only ones who seem to count according to the powers that be. Who cares that 90+% of people are worse off, right? And the media goes right along with it and then is amazed we vote for ‘extremists’.

  10. avatar

    The crisis in regards to sovereign debt seems to have abated, I think the Eurozone has learnt that it can’t let any country default without destroying the Euro. There is still a chance that if investors one day decide that Italy, Spain or France won’t be able to pay its debts (and Germany couldn’t cover them) then a worse crisis could happen (but if that happens then we really would be in trouble!).
    Europe will have more economic crisis’s for sure, however I’d like to think we’re on the recovery side of the last shock (and I hope investors have priced in a greater risk on the Euro than before!). This probably won’t be much comfort for the average joe and it will be messy for a few years yet!

  11. avatar
    catherine benning

    How could any of us consider the problems in the EU are over or on the way out? It will not be and cannot be unless there is a dramatic change in the policy Europe have demanded we live by.

    We are being run by criminals. Criminals that take the breath out of the lungs of the economy to the extent of bankruptcy. Unless and until that acceptance by all of us changes, then nothing can be on course to relieve us of downfall.

    This video only scratches the surface of the corruption we are presently forced to live under.

    And this man is praying that the criminals keeping him going and those that are back him will not be found out before he gets us out of Europe where they all fear being tried for their crimes against humanity if we remain inside it. That is what is at the back of Farage. Indeed, he and his funders are terrified the current starvation of the British people will cause a revolution against them for their treasonous economic policies before too long. And the only way their heads will not be on the block is by blaming Europe for this downfall in morality and economic standards taking place in the UK today.

    Admittedly immigration policies throughout Europe allowing a massive influx of dependents from outside the EU is creating turmoil, and so it is easy for these people to use Europe as a shill, but what they fear most is, they will be caught out and challenged personally by the electorate when the realization of why they went along with this lunacy in order to create slavery across the entire European continent was/is accepted..

    • avatar

      Mass immigration is pushed by the EU-elites because it dilutes national identity.

  12. avatar

    No its not over by far, its just started! Brussels has been using its propaganda machine for years to influence its position in the eu. Problem is they have openend pandoras box and found out that the people of europe are more resilient than they would have hoped for . They have tried war senarios to scare people into thinking that a fed is the only way to go, economic ruin, they have even gone as far as saying that people whom dont believe in thier plans are populists/nationalists etc.
    Now there are certain eu politicians who would like to censure anything that is not in thier interest ,internet and other media, and they say they are democatic.
    Give me a break eurofiles dont know what the word democracy means, they only worship their agenda .Countries are have fallen one by one into the fed trap, and no we will not be better of we will loose our countries ,and the weak nations will cowtow to the stronger ones ,thats it.
    Slowley the pooling of soveriegns will continue , and all nice and quite , while banks fall under a union , then fiscal union , then political union.
    I have to say that they have put all the key players in the right place, nice work.
    So , the real crises is not yet upon us but will be soon . I firmly believe scaling back brussels , and clawing back soverenty for the countries is the only way to avert an even bigger crises.
    Project fed has cost way to much and its time to rethink .

  13. avatar
    catherine benning

    Another reason this lunacy continues and will continue until the people do something to stop it, is all here. Just expand this to all matters of concern.

    Too many at the top making too much money to give a toss.

  14. avatar
    catherine benning

    And further:

    The game is up for free market deregulated capitalism, sold to us all by the low life Milton Friedman and taken up by the two Alzheimer’s sufferers, Reagan and Thatcher. Along with their half wit followers.

    this can only end in war, with a devastation not seen in Europe for decades, begun when the US economy fails as it definitely will.

    Use your loaf Europe. Market distortion has been sanctioned by all of you. Greed being the underlying deadly sin.

  15. avatar

    I have some bad news for people who think this ‘crisis’ is over: tt has only just begun.

    The financial-economic system of the western world simply isn’t sustainable. You can’t build permanent wealth with borrowed money. Economies cannot ‘grow’ forever. And the Euro is not the cause in any way, but it is making it infinitely worse.

    What has been done in the last five years is papering over the cracks. Almost all countries have significantly higher debt now than five years ago (including Greece with their ‘haircuts’). Deficits are up rather than down (despite the desperate attempts at manipulating the figures for the sake of appearances).

    The biggest mistake of all however was ‘saving’ the banks. They should all have been (permanently) nationalized and all its current and former executives arrested for racketeering, profiteering and fraud. Think LIBOR is the worst of their excesses? Better think again. These banks are all at the trough of central bank money printing which is the ‘only game in town’ now.

    The value of assets held by the rich (mostly) is being propped up with money printing/QE. QE has never been anything else than bailouts for the rich. Ask Paul Krugman, he said so when Bush was president.

    Stockmarkets at record highs? Again, nothing but central bank and government interventions. The bubble is bigger than ever before, the ‘too big to fail’ banks are ‘too bigger too failer’ than ever before. The ECB is loaded with worthless ‘collateral’ which sooner or later the taxpayer will have to make the ECB whole when it has to take the inevitable losses.

    In short: since 2008, the rich do well, corporations and banks benefit, the middle class shrinks, poverty and unemployment are way up, yet the media and the politicians want us to think there is some kind of recovery. They use statistical agencies to produce bogus and manipulated numbers to ‘sustain’ their case.

    Sadly, the peoples seem oblivious to all of this, and in fact some of them are crying out for ‘more’. I wish someone would bring back the spirit of 1789… maybe the French have some revolutionary spirit left in them, or have they too been bribed with (unsustainable) promises of future pensions (to be funded by Germany)?

  16. avatar

    really hope this situation to be solved and make peace!!!

  17. avatar

    The 2007-2008 financial crisis started when I was just in school. Ever since then (for all my adult life, basically) it feels like Europe has been lurching from one crisis to another. What does a post-crisis Europe look like?

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