Boskin J. Μ. (2014) “Europe’s Options“, Project Syndicate, 22 July.
Many Europeans have come to believe that they have weathered the economic and financial storm. In the last two years, deficits and debt have stabilized. Yields on the sovereign debt of the eurozone periphery’s weak economies have fallen sharply. Portugal and Ireland have exited their bailout programs. Talk of Greece leaving the euro has subsided.
CommentsView/Create comment on this paragraphAll of that is true, but there is a big catch: economic growth in the European Union remains anemic. GDP in Holland and Italy shrank in the last quarter, and France’s barely budged. Forecasters are revising down their estimates for 2014 eurozone growth to just 1% year on year. Unemployment remains at a staggering 11.6% in the eurozone as a whole, compared to 10% in the United States at the worst of America’s Great Recession. It is above 25% in Greece and Spain – and even higher among the young.
CommentsView/Create comment on this paragraphEurope’s economy remains shackled by three problems – sovereign debt, the euro, and wobbly banks – despite several new policy backstops: the European Stability Mechanism (ESM); the European Central Bank’s easy-money policies and holdings of sovereign debt; and the ECB’s takeover in November of supervision of the 130 or so largest pan-eurozone banks. None of these reforms has been sufficient to restore the stronger growth that Europe desperately needs.
Relevant posts:
- Pelagidis, Τ. & Mitsopoulos, Μ. (2014) “Greece: From Exit to Recovery?“, Brookings Institution Press, June.
- International Labour Organization (2014) “World Social Protection Report 2014/15, Building Economic Recovery, Inclusive Development & Social Justice“, International Labour Office Geneva, 03 June.
- Ozlem Onaran, Ο. & Stockhammer, Ε. (2014) “Why The Recovery Needs Wage Growth“, Social Europe Journal, 21 May.