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Eurozone recovery: The world is not enough

Tilford, S., (2013), “Eurozone recovery: The world is not enough”, Centre for European Reform Blog, 03 Οκτωβρίου.

The end of the eurozone’s long recession has been met with relief by its policy-makers, with some jumping on the news to justify their management of the eurozone crisis. They argue that the eurozone economy is on the mend, and the recovery will gain momentum over the coming quarter. If they are right, then the outlook for the euro has indeed improved: faster growth will make it easier for countries to service their debt, bring down unemployment and help contain political populism. Unfortunately, their optimism is almost certainly misplaced. The basic problem is that the world cannot accommodate a Europe refashioned in Germany’s image.

Economists should always be wary of extrapolating from a period of exceptionally bad economic performance. Economies do recover, as the sudden jump in the UK’s growth rate over the course of 2013 shows. But there are reasons to doubt that the eurozone’s return to growth in the second quarter of 2013 (ending six consecutive quarters of contraction) is the start of an economic rebound strong enough to get on top of debt ratios and bring down unemployment.


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