Interview: “Five minutes with Philippe Legrain: “The Eurozone has become a glorified debtors’ prison”, LSE EUROPP, 09 Μαρτίου 2015.
With no lasting solution yet found for dealing with Greek debt, and economies in the Eurozone continuing to suffer from weak growth, how can Europe finally solve the problems brought on by the financial crisis? In an interview with EUROPP’s editor Stuart Brown, Philippe Legrain discusses the policy failures at the root of the crisis, the need to stimulate demand in Eurozone economies, and why the German focus on cutting wages to improve competitiveness is simply exacerbating existing problems.
Have the right lessons been learned from the crisis in the Eurozone?
The short answer is No. Catastrophic mistakes by Eurozone policymakers – primarily Angela Merkel’s government in Berlin, the European Central Bank in Frankfurt and the European Commission in Brussels – have transformed a financial crisis into a much deeper economic and political one.
More than seven years into the crisis, the Eurozone is doing much worse than the United States, worse than Japan during its lost decade in the 1990s, and worse even than Europe in the 1930s. The economy, which is still 2 per cent smaller than in early 2008, is stagnating. The least-bad performer, Germany, has grown by less than Britain over that period and less than half as much as Sweden, Switzerland and the US.
The worst, Greece, has shrunk by more than a quarter and is faring worse than Germany did during the Great Depression. Many people’s living standards have slumped and unemployment is painfully high: 11.4 per cent overall, much higher in Southern Europe, scarily so among young people. A lost generation is in the making. In a nutshell, the Eurozone is sinking into a deflationary debt trap, with tragic social consequences and unpredictable political ones.
Σχετικές αναρτήσεις:
- Αυγουλέας, Α. (2014) “Η Ελλάδα δεν είναι Αργεντινή του 2005, ούτε Γερμανία του 1953“, New Money Newspaper, 05 Δεκεμβρίου.
- The Editors (2014) “What’s Bad for Germany Could Be Good for Europe“, Bloomberg View, 04 Noεμβρίου.
- Hancké, Β. (2014) “German austerity is not only damaging the Eurozone, but is also starving the country of its own much needed investment“, LSE EUROPP, 03 Νοεμβρίου.