After twenty years, the euro is doing quite well. This was stated by Adriaan Schout, head of the Europe Program at the Clingendael Institute. “The euro has really proven itself. It has been accepted in the Member States and outside Europe, there is trust, it is being traded.
This afternoon, Schout will participate in the round table in the House of Representatives on the future of the euro. According to the EU expert, the euro performed “fairly average” against the dollar. ‘Growth is reasonably good in Europe, a number of weak countries have gotten out of trouble. Even a country like Portugal has recovered. That was a really problematic country.”
However, according to Schout, the debt burden remains the biggest problem within the eurozone. ‘The real weak ones are above all Italy and Greece, we must also be careful of the increase in debts of France and Belgium. But overall it’s a pretty average picture.’
Schout can’t estimate how likely things really are to go wrong. ‘France can still go up a bit, Italy is the big problem. If interest rates start to rise, things could go quite quickly in Italy, but I don’t think that will happen immediately. Italy is also one of the richest countries, the wealth per household in Italy is the highest’.
Greece scenery
If things go unexpectedly wrong, then Schout foresees a Greek scenario for Italy. “Solidarity with Italy will not be very great. That was the case with Covid, but it was really about public health. If it really becomes an economic crisis, I think Italy will just have to cancel its debts and, above all, start taxing assets’.
Unsustainable
Former Finance Minister Hans Hoogervorst called the Eurozone unsustainable in De Telegraaf. According to him, the risks of a major financial crisis are rising, budget agreements and debt standards are being breached, and the European Central Bank is opting to “keep it wet”. Schout calls it too alarmist.
Problems
‘I think those warnings are really justified, now in Italy they know they have big problems. It is no longer the case that people only look to Europe for solutions, they see them themselves.’ What about the unsustainable eurozone? ‘Unsustainable means countries are exiting the euro, I don’t think that will happen. Italy will think about it if it’s too hot for them, but a euro exit for a struggling country is a really bad scenario.’
According to Schout, a discussion on the unsustainability and exit from the euro will produce very little: “This will not happen, one day we will have another crisis and it will get hot, but Italy will have to reform its taxes”.
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Source: BNR
Andrew Dwight is an author and economy journalist who writes for 24 News Globe. He has a deep understanding of financial markets and a passion for analyzing economic trends and news. With a talent for breaking down complex economic concepts into easily understandable terms, Andrew has become a respected voice in the field of economics journalism.
