The EU’s centrally important agreement on fiscal discipline adopted in 1997 is the Stability and Growth Pact. The forecast for growth in the EU this year is 1% — and that will be subject to circumstance, as always, and policy.
Economist Pierre Defraigne predicts that Germany and France, and other industrially strong states, have better chances of continuing out of the slump than those in the south of Europe.
Defraigne said: “These countries’ position in the international division of labour was weak, and the rise in Asian power stripped them of their small comparative advantage. Their challenge is now to diversify their economies, and that means major investment, in training, research and sound government and administration.”
The euro zone countries hold the keys to the economic kitchen in their hands, but their recipe will require various ingredients.
“A real compromise at euro zone level means that getting out of debt must be done in an orderly fashion, with a lot of solidarity and discipline.”