As Trump’s destructive chaos leads global investors to desperately search for safe alternatives to US Treasury bonds, the EU has been given an unprecedented opportunity.
In addition to satisfying investor demand, a large issuance of common EU bonds would strengthen Europe’s economy, security, and policymaking autonomy.
Read my latest column for Project Syndicate
It’s economically significant and politically beneficial, but it leaves the eurozone’s deeper problems unresolved.
Read my latest for Project Syndicate
Eurozone finance ministers have finally agreed a package of measures to respond to the coronavirus crisis. But in the face of an unprecedented medical and economic emergency, it is inadequate. What the eurozone needs is a large, temporary coronavirus Marshall Plan, funded by common debt that the ECB would buy and hold for the foreseeable future.
Read my latest for Project Syndicate.
As Europe faces an unprecedented coronavirus crisis that is so far hitting Italy and Spain particularly hard and is straining the EU to breaking point, an exceptional “corona bond” would provide the fiscal firepower to support stricken businesses and workers and demonstrate European solidarity. If not now, when?
Read my latest for Brussels Times
My piece was quoted by Ishaan Tharoor in the Washington Post as follows:
The coronabonds, wrote economist Philippe Legrain, would “give the eurozone greater geopolitical reach and provide greater protection against President Donald Trump’s abuse of the dominance of the US dollar for harmful political ends.” It would also prove that “European solidarity exists,” according to Legrain.
“The eurozone’s trend rate of growth is very low due to poor productivity and dismal demography, so cyclical downturns easily lead to stagnation,” said Philippe Legrain, visiting senior fellow at the London School of Economics. “In addition, monetary policy can’t do much more, while fiscal stimulus is likely to be too little, too late.”
Read the full piece.
Does the flagging eurozone need a fiscal boost as well as a monetary one? The debate in policy circles is slowly shifting.
I’m quoted right at the start of this excellent analysis piece by Mark John for Reuters.
“There is a shift towards talking about stimulus but there is no dramatic leap forward,” said Philippe Legrain, adviser to the European Commission during the aftermath of Europe’s 2009 sovereign debt crisis and author of the book “European Spring”, a diagnosis of Europe’s economic failings.
“There is no sense of urgency so far … That might happen when the euro zone enters recession.”
Read the full piece.
My latest for Project Syndicate
Is the eurozone heading for recession? How will policymakers react if the slowdown does get worse? And what damage could an economic downturn do to Europe’s already fractious politics? Those pressing questions ought to be at the top of policymakers’ minds in the run-up to the European Parliament elections in May.
Read my latest column for the Brussels Times
Angela Merkel’s announcement of her political departure has prompted a predictable response from many quarters: that she was the “steady hand” that held Europe together, and that her “strong and stabilising leadership” will be sorely missed.
Nonsense. Merkel’s 13 years in office have involved domestic drift and European decay. She has complacently coasted along, failing to address Germany’s mounting economic and security challenges, and allowing Europe’s many crises to fester. Her approach would be tolerable for a small country in quiet times; it is catastrophic for Europe’s dominant power in an era of upheaval, as I explain in Project Syndicate.
Mehreen Khan kindly mentioned the piece in the FT’s Brussels briefing
While Europe’s economy has picked up and there is no immediate sign of financial stress, many analysts maintain that reforms are needed to protect the single currency.
“Make no mistake, the euro desperately needs revamping,” Philippe Legrain, a former adviser to the European Commission president and a senior visiting fellow at the London School of Economics’ European Institute wrote of the reforms.
“The eurozone’s institutional framework also needs fundamental reform in four big areas: finance, fiscal policy, economic imbalances, and democratic choice and accountability.”
Check out the full article.
Germany’s economy is doing fine right now and it finally has a new government. So it’s perhaps understandable that it seems content to coast along. Why mess with an ostensibly winning formula? Steady-as-she-goes, business-as-usual Merkelism seems successful and safe.
Yet Germany is actually far more vulnerable than it seems. Europe’s export powerhouse has long been a free-rider on both the open markets and the nuclear security guarantee provided by the United States. Both of those are under threat from Angela Merkel’s ungracious host in Washington yesterday, Donald Trump. The crumbling of that liberal international order seems likely to make Germany even more reliant on the EU for its future prosperity and security.
Yet Merkel seems unwilling to make the short-term concessions needed to secure the longer-term stability and effectiveness of both the eurozone and the EU. This complacency is dangerously shortsighted — and a potentially historic tragedy for Europe. My latest for Foreign Policy.
While GDP growth has strengthened, that tells us little about whether societal wellbeing is improving, let alone whether everyone in society is thriving. My latest for Brussels Times tries to provide an answer.
At the University of Amsterdam’s Room for Discussion on 21 September
My wrap-up piece for Project Syndicate
President Macron’s election has created new hope that the eurozone can be fixed. But the optimism is exaggerated, and things might even end up worse off. My column for Brussels Times set out how to actually fix the eurozone.
Celebrate Emmanuel Macron’s victory, but beware of pitfalls ahead. Populism is far from dead. My latest column for Project Syndicate
My column for Project Syndicate
I was an expert witness to the House of Lords’ European Union Committee report into completing Europe’s economic and monetary union. In the final report published in May 2016, I am quoted several times.
Philippe Legrain… argued, in contrast, that this reduction in Germany’s surplus with the eurozone meant “that it is exporting its capital elsewhere, draining demand from the eurozone and exporting deflation to the rest of the eurozone.”… Philippe Legrain was disappointed that the Five Presidents’ Report did nothing to “tackle the issue of a mercantilist German core and the deflationary impact of that.”93
Other witnesses also criticised the narrow focus on competitiveness in the Five Presidents’ Report. Philippe Legrain said that competitiveness was irrelevant in responding to the eurozone’s challenges, and favoured “boosting productivity growth”. Focusing on ‘competitiveness’ meant: “you end up specialising in lower-end production rather than dynamically moving up the value chain and producing better goods for higher wages.”102
Philippe Legrain and Professor Jones drew attention to the structure of deposit insurance currently in place. Professor Jones noted that “the different types of German banks have different deposit insurance. That is the biggest part of the problem. Sparkassen and Landesbanken do not want to get implicated in a European system because they have their own preferential arrangements.”165 Philippe Legrain predicted that one could imagine a ‘carve out’ for the very politically powerful Sparkassen banks, similar to their arrangements under the Banking Union.166 Should EDIS be developed, the BBA supported it being embedded into the Banking Union framework, so that “the scope of banks mirrors closely the scope of single supervisory and resolution mechanism.”167
Philippe Legrain summarised the problem facing the eurozone: “We have election after election in the eurozone in which voters reject the outgoing Government, and the first thing that happens is that voters are told that they have to stick to the old policies of the government they have just rejected because EU rules say so, and I do not think that is desirable or sustainable.”210
Philippe Legrain considered that, in the immediate term, “there is little prospect of eurozone members caucusing together, simply because they disagree on so much.227
Philippe Legrain thought that the European Parliament would resist the creation of a new and separate parliament: “Such is the power of the European Parliament that it is inconceivable that you would create a separate structure … a eurozone parliament, if such a parliament were to emerge, would basically start off as a committee made up of members of the European Parliament from eurozone countries.”238
I was interviewed by Aron Kuthi of Magyar Nemzet, a Hungarian newspaper. Since I don’t read Hungarian and the article isn’t online, I can’t be sure what it says!
