The EEAG Report on the European Economy 2014. The road towards cohesion

On 27 February 2014, the European Economic Advisory Group at CESifo presented its thirteenth report 'Report on the European Economy' at a press conference in Brussels and at press conferences in major European cities.

Main chapters:

Chapters
+ Macroeconomic Outlook
+ Switzerland: Relic of the Past, Model for the Future?
+ Austerity: Hurting but Helping
+ Banking Union: Who Should Take Charge?

The world economy showed strong signs of recovery in 2013, with the United States providing solid support. The euro area’s economy also performed better last year than in 2012, although its performance varied across the different member states. The sovereign and banking crises have also eased, but the situation nevertheless remains fragile. Mass unemployment in several euro area countries is keeping social tensions at a high level; while internal and external rebalancing continues in the periphery. The sovereign debt crisis may have eased in 2013, but it certainly was not resolved; and debt levels increased further. Although several reforms on euro area level are being implemented, their outcome and impact remain uncertain. This year’s EEAG report emphasises that supporting cohesion between member states, as well as maintaining fiscal and regulatory discipline, is crucial for Europe.

Chapter 1 of the report discusses the immediate macroeconomic outlook for the global economy, with a particular focus on the European situation. Chapter 2 focuses on Switzerland, and specifically on the lessons that Europe can learn from the Swiss experience in maintaining cohesion while supporting diversity, and in reaching pragmatic compromises in the creation of common institutions and policies. Chapter 3 analyses the much debated issue of austerity and highlights that fiscal discipline is not only needed to ensure the long-term sustainability of public debt, but also for external rebalancing, which is vital to the long-term sustainability of the euro. Finally, Chapter 4 looks at plans and measures to implement a banking union in Europe and discusses who will pay for future banking crises, and who will end up footing the bill for the latest crisis.

European Economic Advisory Group at CESifo: EEAG Report on the European Economy (link to the latest edition) http://www.cesifo-group.org/eeag

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