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?