Europe at a Crossroads

The Euro area’s unprecedented program of fiscal risk sharing in response to the pandemic, and a new, likely less fiscally conservative ruling coalition in Germany, looks set to put the region on a path towards increased integration, higher growth, and better investor returns. But whether the current moment will go down as a seized—or (another) missed—opportunity for Euro area integration and growth is Top of Mind. We speak with our own Jari Stehn, who is optimistic that the fiscal shifts will move the region in the right direction over the medium term and remains constructive on the economic outlook despite China and energy risks, and former ECB Chief Economist Otmar Issing, who is more worried about the fiscal shifts and longer-term growth. We then ask former PM of Italy and President of the EC Romano Prodi and Oxford’s Timothy Garton Ash whether these shifts will ultimately lead to a stronger EU. Prodi thinks the EU is past the point of existential danger, although integration from here will be slow. But Garton Ash warns that peak populism may not be behind us.