Opinion

Sunday 24 September 2017

Euro stuck in danger zone without an escape plan

Timid leadership and restrictive policy means we are unlikely to have a sustainable recovery, writes Colm McCarthy

IN THE ZONE: A banner showing a Latvian euro coin at the European Commission headquarters in Brussels. The country will join the eurozone on January 1, and the currency union will then have a total number of 18 members. Photo: Francois Lenoir
IN THE ZONE: A banner showing a Latvian euro coin at the European Commission headquarters in Brussels. The country will join the eurozone on January 1, and the currency union will then have a total number of 18 members. Photo: Francois Lenoir
Colm McCarthy

Colm McCarthy

Rosy assessments of economic prospects in Europe keep running up against a few inconvenient truths: the economies in most countries are showing no signs of recovery, the banking system is still broken and there is no political willingness to fix it.

The overall stance of macroeconomic policy at eurozone level remains restrictive, despite the evidence of widespread stagnation. The policy stance is to issue upbeat forecasts while doing nothing to make them a reality.

The eurozone is entering the sixth year of the banking crisis with no evidence that the critical lessons have been learnt or that serious safeguards against a repetition have been put in place. There is no sign of political commitment to a proper banking union and the financial system still looks fragile. This overshadows prospects for sustainable recovery in Europe generally and particularly in Ireland, one of the principal casualties of the eurozone debacle.

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