När spricker EMU?

Wolfgang Munchau

EMU Start


Is the euro forever?

Den brittiske premiärminstern David Cameron lovar en folkomröstning om det brittiska EU-medlemskapet om hans konservativa parti vinner parlamentsvalet 2015.
Han säger själv att han inte vill att Storbritannien ska lämna unionen, men att det krävs en ny uppgörelse inom EU
Ekot 23 januari 2013

Full text


There is no provision in any European Treaty for a country to leave the eurozone
That was deliberate
It was intended to make it clear that the eurozone was forever – like the Soviet Union and the Holy Roman Empire
Roger Bootle, Daily Telegraph 5 September 2011

Paul de Grauwe, professor of economics at the University of Leuven in Belgium and an adviser to Mr Barroso, fears that a lack of political integration is undermining the single currency project.
BBC 14/5 2006

"I think that in the long run, without a political union, the eurozone just will not hold; there will be too much conflict, too much tension between the different member states and in the end, some countries will want to pull out," he says.

"In fact, I can be even more explicit: if we do not move forward at a political level, then it's quite sure the euro will collapse."

Full text

Articles by Paul de Grauwe at Panco Villa

Is the euro forever?
Six and a half years since the launch of monetary union, this was precisely what eurozone officials and central bankers had been dreading and seeking to avoid at all cost: a debate about the future of the euro.
Wolfgang Munchau Financial Times 8/6 2005

The author is an associate editor of the Financial Times. His column on Europe appears on Mondays

Roberto Maroni, Italy’s welfare minister and a leading representative of the Northern League, a member of the Italian centre-right coalition, said last week that his country should consider bringing back the lira. For the first time, a European minister had publicly raised the possibility of reintroducing a national currency.

Six and a half years since the launch of monetary union, this was precisely what eurozone officials and central bankers had been dreading and seeking to avoid at all cost: a debate about the future of the euro.

Bob Mundell, the Nobel Prize-winning economist and originator of the concept of an optimal currency area, represents a mainstream view when he predicts: “There is less chance that Emu will be disbanded than there is of a collapse of the dollar.”

An increasing number /of economists/ are debating whether /the euro/ can survive in the long run – whether “the euro is forever”, as a Commission official put it.

Paul de Grauwe, professor of international economics at the University of Leuven in Belgium, says the rejection of the constitution raises doubts about Europe’s commitment to further political union, adding: “A monetary union requires a political union in the long run to maintain sustainability. It now seems that many Europeans do not want to go further in political integration. We have a choice here. If we want to retain the euro in the long run, we need political union.”

The constitution would have made it easier for them to co-ordinate fiscal policy.

The argument that economic union requires political union is rooted both in history and economics. Historical experience has shown that all large-country monetary unions that did not turn into political unions eventually collapsed. The Latin Monetary Union of 1861-1920 collapsed partly because of a lack of fiscal discipline among its members – Italy, France, Belgium, Switzerland and Greece. A monetary union set up in 1873 between Sweden – which included Norway at the time – and Denmark failed as political circumstances changed. By contrast, Germany’s Zoll­verein, the 19th century customs union that developed into a monetary union, succeeded precisely because of the country’s political unification in 1871.

These deteriorating economic conditions increasingly alarm economists. The independent Centre for European Policy Studies in Brussels last week published a report* in which it raised the prospect that monetary union might fall apart.

But an Italian crisis alone is unlikely to lead to the break-up of the eurozone.

The problem for the eurozone is that Italy is not alone. The CEPS report says: “Portugal and Greece are in a similar situation. These two countries are also running the highest government budget deficits in the eurozone. Even a strong performer like Spain masks under the strong growth a deteriorating competitive position that, were its housing market to slow down, would put its economic performance at risk. Thus, the list of countries at risk is increasing, and could easily become a majority soon.”

Full text

EMU at Risk. Daniel Gros, Thomas Mayer and Angel Ubide. Seventh annual report of the CEPS Macroeconomic Policy Group. Centre for European Policy Studies, June 2005