Is the Eurozone really out of the woods?

The eurozone economy is not booming and there is little to suggest it’s about to boom. But there are good reasons to expect the current cyclical recovery to continue for several years. This will be the case irrespective of whether the French and German governments can strike a deal on major reforms of the currency union. If the upswing is short-lived for one or a combination of the reasons outlined in this article, the eurozone will struggle to avoid a crisis come the next downturn. Fiscal policies will be too tight, the ECB will not be able to cut rates and the European Stability Mechanism (ESM) will have neither the resources nor flexibility to address debt crises. The longer the upturn lasts, the more fiscal and monetary ammunition will be available to counter the downturn, the stronger the banks will be, and a serious crisis will be less likely.

• Primary Source

ESO: Background information: Ten years of financial crisis - what have we learnt?, August 2017 http://www.europeansources.info/record/ten-years-of-financial-crisis-what-have-we-learnt/

ESO: Key Source: The Euro Crisis http://www.europeansources.info/record/the-euro-crisis-key-sources/

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