Speakers
Objectives
The euro’s successes cannot hide its weaknesses. Over the past 25 years, many Member States have failed to comply with the rules of the Stability and Growth Pact. Against this backdrop, economic disparities and differences in living standards between the main euro area countries have widened considerably. Since 2020 and the pandemic, existing economic heterogeneities between EU Member States have intensified.This exchange of views will first focus on the consequences of these disparities for the functioning of Economic and Monetary Union. Speakers will then be invited to share their views on the risks and opportunities of modifying the Stability Pact rule on the ratio of public deficit to GDP, and of recourse to European borrowing to finance defence spending, against a background of over-indebtedness in many countries and weak growth prospects.
Points of discussion
- What are the possible consequences for the functioning of the economic and monetary union and the euro of the growing economic divergences between the main EU countries in terms of public deficit and debt and current account balances?
a. Could the risk of the high level of public (and private) debt in several countries (Italy, France and Belgium) and the uncontrolled drift of French public finances lead to a sovereign debt crisis? What are the most urgent adjustments needed to avoid such a crisis?
b. How could banks, companies and EU economies be affected by rising sovereign risks and a weakening euro? - Beyond short-term proposals like the National Escape Clause (NEC), what would be the long-term solutions to finance structurally higher defence-related public expenditure? Is our current fiscal framework fit for this purpose? Is there a case for more European join action and joint financing?