John Bruton: The challenge for Europe and its currency is more political than it is financial
THE big enemy of economic growth is uncertainty. Particularly uncertainty about the value of money. If people do not feel the value of their money is safe, they will not invest, and they will not put their savings to work in a form that will create jobs.
Securing the euro is about securing the value of people’s savings, so that they will be willing to invest them productively. That means assuring them that there is a solid and workable political structure standing behind their money.
Now that the financial crisis has spread to Spain and Italy, the problem has become too big for the step by step approach to EU reform, that has been followed since 2008. Now we need an integrated package where the short term elements are linked to credible long term commitments. That is what will be considered at the EU Summit at the end of this month. Failure to come up with a credible package could set off a downward spiral, like the one that followed the Lehman collapse, from which everyone would lose.