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Facts and Findings

Deceptive calm?

by David Gregosz, Thomas Köster

Centrifugal forces in the Eurozone remain high

The European Economic and Monetary Union (EMU) has experienced an eventful history since the introduction of the Euro as currency twenty years ago. The past decade in particular was shaped by crisis. The interplay of external shocks and design flaws in the Eurozone showcased that a future-proof Euro calls for two lines of actions: firstly competitive European economies with sound public finances and the ability to address global challenges politically; secondly an institutional framework that allows for sufficient coordination of national economic and fiscal policies, enforces the liability principle, and provides emergency tools for economic crises. This paper seeks to provide arguments and generate momentum for EMU’s further development.

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  • The economic situation of important Eurozone countries is precarious and necessary reforms have largely come to a standstill.
  • Under these circumstances, the Eurozone is vulnerable to external shocks or a sharp economic slowdown.
  • More than ever before, success lies in the internal economic consolidation of the Eurozone. The focus must be on currency confidence, entrepreneurship and innovation. This is where the new European Commission and the Euro Group must start after the European elections.
  • As a trading and economic area, Europe only gains economic weight through its innovative companies. This pillar of a liberal European economic system must receive stronger support from the public, whilst being strengthened by a European small and medium-sized enterprises (SMEs) policy. The effects of an active industrial policy will remain limited.
  • Entrepreneurial success largely depends on an adequate legal framework. Accordingly, national governments should review their economic policy priorities.
  • As for the Euro Group, it should promptly start a process of self-assessment following the European elections. This is especially true in light of current economic developments and the impending Brexit.


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