The euro area is not in recovery anymore— it is in full-scale upswing. Even Italy, the current worst performer, will still record 1.3% of growth this year. Looking at these figures, the crisis is clearly behind us and Europe is in decent shape. But substantial risks surround this very flattering outlook. Some of them are economic in nature—most pressingly, the upcoming normalization of ECB monetary policy will be a substantial challenge for a number of member states with high legacy debt. But mostly, the risks are political. The Franco-German compromise at Meseberg has put the right questions on the table. Although they cover only part of the reforms needed for the Eurozone, it makes sense to tackle the three areas now in focus first— banking union, fiscal capacity and ESM reform. Lucas Guttenberg and Eulalia Rubio discuss the reforms needed in the eurozone in their Policy Brief.
Dr. Eulalia Rubio is Senior Research Fellow at the Jacques Delors Institute Paris, she formally worked at the Pompeu Fabra University in Barcelona.
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