NEW YORK — Europe’s stagnant economy will slow even more, unless leaders are open to turning the Eurozone into a more consolidated fiscal union or simply reducing its size, said an economist at The Conference Board, a global economic think tank, last Tuesday morning.
Ken Goldstein, an economist at The Conference Board, predicted that the Eurozone is headed for a break-up into a smaller union unless leaders agree to turn the monetary union into an integrated fiscal union, which the stronger economies may try to resist.
Goldstein said there are many prominent issues that need to be dealt with in order to solve the Eurozone crisis and turn around Europe’s economy. One central issue revolves around the Euro, a currency that does not exactly mesh well with all Eurozone countries. “It is not about Greece or Spain. It is a one-size-fits-all currency, when they are not all the same size,” Goldstein said.
Another issue that is stopping the Eurozone from solving its crisis is the fact that a monetary union is present, without a fiscal union. “What is clear to everyone outside of Europe is without a fiscal union, the Euro is gone,” said Goldstein.
If countries share the same currency, but do not share the same values and fiscal regulations (labor regulations, tax regulations, etc.), then a successful monetary union may be hard to achieve.
Ultimately, Goldstein advocates that the resolution to the Eurozone crisis is dependent upon whether European leaders are open or resistant to political changes within their specific countries. “This is not an economic issue, but a political issue,” Goldstein said.
For there to be alignment between the different countries on fiscal issues, there needs to be the political will to do so, even if that means making sweeping regulatory changes within each country.
Europe’s economy is not the only economy within the international sphere that seems to be problematic. The US certainly has its own economic challenges, yet some may consider Europe’s situation far worse. “We’ve clearly got a far more calmer market than Europe,” Goldstein said. “I’d rather have our problems than theirs.”