It’s good to see someone other than me pointing out what is the obvious truth. From Philip Stephens at the Financial Times:
The eurozone needs strong incentives for politicians in debtor states to take the unpopular measures needed to improve competitiveness. The flawed assumption is that there is a straight either/or choice. Why not structural modernisation and fiscal support for growth-enhancing investment?
There has rarely been a better time for Europe to invest in its future. Inflation has disappeared. Germany is awash with fiscal surpluses, federal, state and municipal. The cost of borrowing is zero. In Emmanuel Macron’s France, Berlin has a partner that has shown it will take tough supply side decisions.
Fiscal support for the eurozone economy is not about digging-holes-and-filling-them-in demand management, though even that would be better than nothing. The continent faces a yawning investment gap. Communications networks need replacing (check your WiFi speed or cellular telephone connection in Germany). The decarbonisation required to meet climate targets demands the re-engineering of the continent’s economy. Europe is way behind the US and China in advanced computing and machine learning.
German leaders know what needs to be done they just don’t know how to get re-elected if they do it, as Jean-Claude Juncker quipped.