Euro and the economy: the final countdown?

Saturday 20 October, 1.30pm until 3.00pm, Pit Theatre

The economic crisis in Europe has become the new normal, a continual background to daily life. Every attempt at stabilisation seems to fall apart, every austerity measure seems to shrink GDP and boost unemployment, every firewall is raced through by capital in flight, every demand for more integration is met with calls for customs borders and protectionist tariffs. So why does the Euro, let alone the EU, continue to exist? Given the continuing rise of China, India and the rest of the developing world, does Europe even have an economic future except as a tourist destination? Or, just as the global financial crisis morphed into a series of sovereign debt crises, might Europe’s woes engulf states worldwide?

Despite fears that Europe as a whole would unravel should Greece exit, attitudes in Brussels and Germany changed quickly as that prospect became more and more likely. Could redefining Europe around a northern, German-dominated model work? Is there a distinction to be made between fiscally prudent countries and their irresponsible and profligate neighbours? Was it right to expect Greece to be more ‘realistic’ and be more like Bulgaria? And why is there such hostility to the idea that countries like Greece, Spain, Portugal or Ireland might be better off with devalued currencies to increase their competitiveness? Closer economic integration seems the only game in town, but surely there is a basic democratic right to decide how our wealth should be distributed: one that is ignored when money goes to bail out Ireland or Spain. There is also a danger, now bailouts have firmly enshrined moral hazard into the banking system, that national economies are being damaged by being kept afloat rather than allowed to fail. The extent of this distortion can be seen in the fact that investors are prepared to take negative returns on German bonds: security is the overriding concern.

Certainly Germany – with its exports, low inflation and unemployment – could be argued to be getting something right. But not every country can be export-led. Nor does every country have the same productivity, and low wages, as Germany – a reality that myths about lazy southern workers express in a crude form. Would the amount of restructuring required to boost productivity and competitiveness at the national level break the structures of the EU? Would the human cost be acceptable? Or could it be achieved across Europe by supra-national action? By the ECB forcing through fiscal and political union on top of monetary? When it comes to the prospects for the European economy, just what is myth and what is reality?

Declan Ganley
chairman and CEO, Rivada Networks; founder and chairman, Libertas Institute

Alexander Horn
economics editor, NovoArgumente; consultant (logistics, production and organisation), German automotive industry

Philippe Legrain
visiting senior fellow, LSE’s European Institute; author, Immigrants: your country needs them and European Spring: Why Our Economies and Politics are in a Mess – and How to Put Them Right

Phil Mullan
economist and business manager; author, Creative Destruction: How to start an economic renaissance

Matina Stevis
economics reporter, Dow Jones Newswires and Wall Street Journal

Angus Kennedy
convenor, The Academy; author, Being Cultured: in defence of discrimination

Produced by
Angus Kennedy convenor, The Academy; author, Being Cultured: in defence of discrimination
Recommended readings
Climate change: EU rebrands green energy campaign Roger Harrabin, BBC News, 8 October 2012

A scale model of European implosion

The budgetary austerity zealously applied by Madrid has revitalised demands for independence in Barcelona. Engaged in a fiscal and economic power struggle with the central government, Catalonia is threatening to disrupt the social and regional equilibrium that underlies Spanish democracy.

José Manuel Pureza, presseurop, 2 October 2012

Why exit is an option for Germany

Should Germany leave the euro? It is, after all, the big country with an obvious exit option.

Martin Wolf, Financial Times, 25 September 2012

Draghi alone cannot save the euro

Is there any way the ECB on its own could make it more credible that the eurozone will last? The answer is: yes and no.

Martin Wolf, Financial Times, 11 September 2012

Greekonomics: The Euro crisis and why politicians don't get it

Politicians ignored or downplayed these in creating the Euro and indeed made the problem worse by watering down the controls that were in place. If the Euro is to survive in the long term, even greater political and fiscal integration and cooperation will be required.

Vicky Pryce, Biteback Publishing, 9 September 2012

Paul Krugman:

To save the single currency beset by difficulties that stem from its initial design, Economics Nobel Prize laureate Paul Krugman argues that Europe should set its sights on low inflation but forget about implementing uniform austerity measures.

Philippe Coste, presseurop, 6 September 2012

The Fight for Democracy - The Libertas Voice in Europe

Declan Galey explains how Libertas wants to turn the European Union into a democratic institution that ordinary Europeans can believe in.

Bruce Arnold, Killynon House Books, 1 May 2012

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