With so many problems facing Eurozone countries, it’s easy to forget about the economy. Unemployment figures released in January 2016 show that unemployment in the 19-country currency bloc has fallen to its lowest rate in more than four years. However, at 10.5% the joblessness rate still represents almost 17 million people unable to find work. That’s almost twice the current unemployment rate of the United States.
Opinion surveys suggest that popular support for the Single Currency has recovered slightly, after dipping 12% during the darkest days of the Eurozone crisis (2008-2013). However, there is a risk that “kicking the can down the road” could become the official sport of European politicians; many of the underlying issues that provoked the crisis are still unresolved.
Want to learn more about the history of the Single Currency and its possible future? Have a look at our infographic below (click for a larger image):
We had a comment from Rui, who strongly supports the ECB’s Quantitative Easing policy. He thinks it was “about time” that strong and decisive action was taken. But how “decisive” has the ECB actually been? Now that Mario Draghi has pledged to do “whatever it takes”, the ECB is committed to QE, and Greece has accepted the latest austerity package, is the Eurozone crisis finally over?
To get a reaction, we spoke to Stefano Micossi, Director General of Italy’s ASSONIME, an association of Italian companies. In a recent edition of our sister publication, Europe’s World, Micossi set out his “three-point plan for Europe’s economic future“. So, how would he respond to Rui’s comment?
The acute phase of the crisis is over, but there is a lingering malaise in the Eurozone which has not gone away and it’s manifestation is high unemployment and low growth. So we have resolved what was basically a confidence crisis at very high cost, and we have managed to combat instability, but we still live in the Eurozone in a rather uncomfortable area which doesn’t seem to be able to produce sufficient growth to produce full employment.
Next up, we had a comment sent in from Max, who believes that the EU cannot keep its monetary union without a full fiscal and political union. Is he right? Is fiscal union a necessary reform for a sustainable European Union? How would Stefano Micossi react?
I would think that in the long term monetary union does require full fiscal union. But the path to that is likely to be very bumpy. The fundamental reason we have the bumpiness is that there is still a high degree of mistrust among the member states on everyone’s determination to run sound and wise budgetary policies, and some people fear that fiscal union might mean having to bear the burdens of the debts contracted by others. And until we can eliminate this mistrust we will not have fiscal union.
Finally, we had a comment from Corado, who thought that the treaty change needed to implement fiscal union was impossible under unanimity voting. With 28 Member States in the European Union, all with veto powers over, is treaty change possible?
Well, I would say that today the conditions to consider treaty change do not seem to be there, with the only exception that certain changes might in due course be required to reach agreement with the United Kingdom, provided they decide to stay in. This, however, may well happen in steps and not immediately. Maybe the United Kingdom will obtain a protocol to start with, which later on will be incorporated into the treaty. In general, today, you don’t see the convergence of long-term vision among European leaders on a shared future that is the prerequisite for being able to agree on treaty changes.
What is the future of the Euro? Is fiscal union a necessary reform for a sustainable Eurozone? Is treaty change even possible? Let us know your thoughts and comments in the form below, and we’ll take them to policymakers and experts for their reactiojns!
IMAGE CREDITS: CC / Flickr – Dennis Skley
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