First published in Le Monde. Translated by David Broder.
No European sovereign, no real budget; no budget, no viable economic policy. As long as Europe does not break out of this dilemma, the Eurozone will remain mired in the vicious circle of stagnation, resentment, and conflicting responsibilities. If a budgetary federalism is out of reach, it is crucial that we can adjust exchange rates in order to give dynamism to growth and employment. And this requires leaving the currency union.
First published on the blog of the Centre de recherche en Économie at Sciences Po. Translated by David Broder.
Upon its introduction at the turn of the millennium, the euro was widely perceived as a major achievement for Europe. Its apparent economic success, combined with the convergence of multiple economic indicators across the various countries, fed this feeling of success. A few years later, the picture looks radically different. The global financial crisis has revealed the imbalances that led to the sovereign debt crisis and which have driven the Eurozone to the brink of breaking apart. The austerity policies that became a continent-wide norm in 2011 have fuelled a long stagnation [See the reports of the independent Annual Growth Survey (iAGS)], with growth rates paling in comparison to those of the United States and the United Kingdom.
This economic under-performance has fed popular resentment against the euro, with a growing number of Europeans today considering it the problem rather than the solution. The financial community itself seems to be preparing for the possibility of leaving or dissolving the single currency, by reducing its cross-border exposure. Greece came close to breaking away in 2015. Finally, the intellectual atmosphere has also changed: leading thinkers like the American economist Joseph Stiglitz and the German sociologist Wolfgang Streeck are but the most visible representatives of a more generalised change in attitudes.