Any critical analysis of the
eurozone crisis does not have
an obvious solution beyond that
of greater fiscal and political
integration. While this may indeed
come to pass, it would not address
the disparity in productivity
between the countries of northern
and southern Europe.
In the absence of a cultural change
in the work ethic, which is hard to
imagine, the inevitable consequence
would be Germany keeping the
southern states on extended
financial life-support.
accelerating social cost, until such
time as the German economy ran
out of money. The strategy will
merely prolong, perhaps for a
generation, the misery to which
millions will continue to be
subjected.
The only practicable way
forward is for insolvent
eurozone members to rebalance
their economies through the
re-introduction of their former
currencies.
This would, of course, be
extremely painful in the medium
term. However, exhange rates
reflecting competitive performance
rather than a single currency, would
enable tourism and other activities
to flourish and economies to grow.
Such an outcome would not satisfy
the federalist deciples of Ardanauer,
Monet and Schuman, the founding
fathers of the EU. It would, however,
bring hope to those countries that would prefer economic and political
self-determination with all its initial
pain, to a slow but remorseless
descent into even more dystopian
misery.
David Cameron's speech at Davos
articulated the need for change. The
EU has 7% of the world's population,
generates 25% of global GDP, but
spends 50% of GDP on welfare, which
is unsustainable. The question is does
the EU have the political and economic
will to change, or will reality impose
change upon it?
