By Anne-Laure Delatte, Michel Husson, Benjamin Lemoine, Éric Monnet, Raul Sampognaro, Bruno Tinel and Sébastien Villemot

About the proposal to cancel ECB-held sovereign debt

While the end of the pandemic is not yet in sight, austerity is nonetheless making a discreet comeback in the public debate. If fiscal orthodoxy tolerated that States have stood by an economy hampered by health restrictions, it claims again that newly contracted sovereign debt would have to be repaid through …

By Bruno Ducoudré, Xavier Timbeau and Sébastien Villemot

Current account imbalances are at the heart of the process that led to the crisis in the euro zone starting in 2009. The initial years of the euro, up to the crisis of 2007-2008, were a period that saw widening imbalances between the countries of the so-called North (or the core) and those of the South (or the periphery) of Europe, as can be seen in Figure …

By Cédric Durand and Sébastien Villemot

Without a European sovereign, no real budget; and without a budget, no viable economic policy. As long as Europe does not emerge from this dilemma, the euro area will remain stuck in the vicious circle of stagnation, resentment and conflicts of responsibility. If fiscal federalism is out of reach, then it is crucial to be able to adjust exchange rates to boost growth and employment by leaving the monetary …

By Cédric Durand and Sébastien Villemot

When it was introduced at the turn of the millennium, the euro was widely perceived as a major achievement for Europe. The apparent economic successes, coupled with cross-country convergence of several economic indicators, fueled this sentiment of success. A couple of years later, the picture looks dramatically different. The world financial crisis has revealed imbalances that have led to the sovereign debt crisis and brought the euro area on …

Talk at the EReNSEP conference in Paris

This talk tries to give answers to two important questions in the current context: to what extent is the euro an economic and political cost for France? And is an exit or dismantling of the euro possible, or would it rather be a catastrophe?

Let’s start with the first question. For France, the identifiable costs of belonging to the euro area are essentially three: two of an …

Between 2007 and 2015, Greece’s public debt rose from 103% to 179% [1] of its GDP (see chart below). The debt-to-GDP ratio rose at an uninterrupted pace, except for a 12-point fall in 2012 following the restructuring imposed on private creditors, and despite the implementation of two macroeconomic adjustment programs (and the beginning of a third) that were aimed precisely at redressing the Greek government’s accounts. Austerity has plunged the country into a …

By Sébastien Villemot and Bruno Ducoudré

The euro zone has made significant efforts to reduce its trade imbalances since the outbreak of the financial crisis. In 2009, only Germany, the Netherlands and Austria had a current account surplus, while all the other countries, in particular France, Italy and Spain, ran current account deficits, resulting in a deficit for the zone as a whole (−0.7% of GDP). Five years later, in 2014, the situation had …

Following its election, the Syriza government has to face a double fiscal and banking emergency, which is the consequence of the past austerity plans and of the 2012 rescue on public funds of the European banks. A real stranglehold was set up by the Troika and the previous governments, in order to prevent any alternative policy. Breaking this stranglehold is a precondition for implementing a social emergency program. The challenge lies in the choice of …