Conference Report: Is there a way out from this crisis?

03/06/2013

The answer to this question is affirmative and a series of concrete policy proposals and institutional reforms were put forward and critically discussed at the FEPS & FJJ conference in Paris on May 25th. In particular, speakers highlighted that the Euro crisis is due to the wrong model of the EMU.

Analysis

Europe is in a severe political, economic and social crisis. Is there a way out from this crisis? The answer to this question is affirmative: we need a stronger and more effective economic and political integration of the Eurozone. It follows that a serious reconsideration of the current economic policies and institutional foundations of the Eurozone are needed in order to embark on a new trajectory where solidarity (at least in terms of job creation and equity) goes hand in hand with growth.

At the economic level, it has now become evident that austerity policies are having negative consequences on growth and employment. Growth rates across Europe have been dismal throughout the crisis period. For instance, in 2012, Italy recorded a negative growth of -2.4%, Spain -1.4%, and Greece -6.4%. Also Germany, who has so far been less affected by the crisis, has recorded a mere 0.6% GDP growth in 2012.

Overall, in 2012 growth performance in the Euro area has also been much lower, at 0.6%, than countries like the US, which recorded a growth rate of 2.2%, and Japan with a growth rate of 2% (Eurostat). Unemployment, especially among the young, has spiralled out of control in many European peripheral countries. In January 2013 youth unemployment reached 55% in Spain, 59.4% in Greece, and 38.7% in Italy.

Furthermore, despite the harsh austerity measures, European peripheral countries have seen their government debt increase further. Despite spending cuts and increase in taxation net government borrowing is only marginally improved.

Six years into the crisis it has now become evident that Europe needs to implement strong progressive policies to stimulate growth and employment and that these policies should be accompanied by a reconsideration of the institutional foundations and settings of the Eurozone. This plea has been endorsed by politicians, economists, political analysts, reunited in Paris on May 25th 2013 for a conference on the future of the Eurozone, organised by the Foundation for European Progressive Studies (FEPS) and the Jean-Jaurès Foundation.

At this conference a series of concrete policy proposals and institutional reforms were put forward and critically discussed. In particular, speakers highlighted that the Euro crisis is due to the wrong model of the European Monetary Union (EMU) and that this should be re-examined and reformed in order to move towards more economic and political integration (the latter being indispensable for the success of the monetary and economic union).

Read the list of concrete proposal into the Conference report (FR & EN) and the speeches in FR by Massimo D’Alema, Martin Schulz and Pierre Moscovici

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