Predictions of the eurozone's collapse are becoming increasingly urgent, not least because of the rising influence of anti-EU political parties in some countries. But the reasons to fear the eurozone’s impending breakup are not as compelling as many believe.
BRUSSELS – What does the eurozone’s future hold? It depends where you look. Some economic indicators suggest that things are looking up for the common currency’s survival; for example, employment has returned to its pre-crisis peak, and per capita GDP growth exceeded that of the United States last year. At the same time, political risks seem to be increasing, despite the improvements in Europe’s economy.
The evidence of an increasing risk of a eurozone breakup comes from three different indicators. But closer examination of those indicators suggests that, while the longer-term risks remain substantial, the short-term risks are rather low.
One widely used indicator is based on Sentix surveys of market participants, which show a strong increase in the proportion who believe that the eurozone will break up soon (over the next 12 months). And this time it is not Greece that is driving the result, but France and Italy.
BRUSSELS – What does the eurozone’s future hold? It depends where you look. Some economic indicators suggest that things are looking up for the common currency’s survival; for example, employment has returned to its pre-crisis peak, and per capita GDP growth exceeded that of the United States last year. At the same time, political risks seem to be increasing, despite the improvements in Europe’s economy.
The evidence of an increasing risk of a eurozone breakup comes from three different indicators. But closer examination of those indicators suggests that, while the longer-term risks remain substantial, the short-term risks are rather low.
One widely used indicator is based on Sentix surveys of market participants, which show a strong increase in the proportion who believe that the eurozone will break up soon (over the next 12 months). And this time it is not Greece that is driving the result, but France and Italy.