Divided we stand? The way forward in EMU's hybrid structure

Karl Pichelmann, European Commission

The EU is being mired in the most serious economic crisis since its creation. The euro area, in particular, has found itself in the middle of an almost perfect storm: (i) A vicious circle of government debt crisis, banking instabilities and weakening economic activity, each feeding each other in a dangerous feed-back loop; (ii) This downward spiral comes on top of probably long-lasting deleveraging needs of both public and private economic actors following the financial crisis of 2008/2009; (iii) But already before the crisis, the euro area had to face growing macroeconomic imbalances and the overall challenges of globalisation, ageing populations and climate change. In this situation, policy makers face a multitude of challenges, fire-fighting to restore macro-financial stability and at the same time preparing the ground to get out of the crisis with more solid foundations for EMU. Thus, the exit strategy from the crisis must simultaneously address adjustment and chart a way into medium-term growth – a difficult but not impossible task. Against that backdrop, the lecture will review the "state- of-play" to overcome the crisis and to build stronger economic governance structures at the European level.


Countries covered: European Union