• user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '3:cfae3415f468ca8d8626330fc9a39c8b' in /home/cer/staging/includes/cache.inc on line 27.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p style=\"text-align: justify;\">Interview with Simon Tilford – chief economist at the Centre for European Reform coming to us all the way from London.</p><p style=\"text-align: justify;\">&nbsp;</p><p style=\"text-align: justify;\">I think a more deeply integrated financial architecture is possibly a solution. One of the reasons why the crises ran out of control in the eurozone is that bank in particular member states have a sole responsibility as the member states wherever within the eurozone as a whole. If we compare that with another big monetary union the United States, it is quite different. So, had for example the eurozone banks been protected or backstopped at the eurozone level rather than on the national level, we would have avoided the crisis in Ireland, we would have probably avoided the worst of the crisis in Spain. Now, what\'s happening is that unconfidence in the banks is undermining confidence in public finances as in turn weakening confidence in public finances is weakening investor\'s faith in the banks. And this is a sort of vicious circle that they need to break. So, shifting responsibility for backstopping banks from the national level to the eurozone level would help but it won\'t in itself be enough.</p><p style=\"text-align: justify;\">&nbsp;</p><p style=\"text-align: justify;\">What needs to be done?</p><p style=\"text-align: justify;\">What needs to be done as a matter of urgency is for the European Central Bank to go into the market and buy a very significant amount of government debt, that\'s of the Spanish, the Italian and etc. in order to dispel fears of default. Until the Central Bank makes it quite plain that these countries will not default the problem will persist. So, what the ECB has to deal up first and foremost is to inject lots of money into financial market, then they need a strategy for the economic growth. Now, that is going to require a number of reforms. One we\'ve already talked about which is a banking sector union. Another will be some form of debt neutralisation. They are going to have to become jointly responsible for one another\'s debt, up to a certain point at least. They should open the way for a sensible fiscal policies. At the moment what\'s happening in the eurozone is that countries that are in recession are slashing public spending. All that is doing is weakening our economies further, undermining confidence in the banks and in the sovereigns, in the governments. That\'s got to stop.</p><p style=\"text-align: justify;\">&nbsp;</p><p style=\"text-align: justify;\">What the eurozone is going to need going forward is a much more flexible Central Bank that doesn\'t just target inflation but has a broader mandate in that, it has a mandate for levels of economic activity, not just a very narrow inflation mandate. One way of doing that which is, be it to have a higher inflation target, at the moment, first, the inflation target is too low and secondly the mandate is very, very narrow. I think it is very difficult to imagine particular member states of Europe agreeing to give the ECB a similar mandate the US had which is price stability plus the economic growth. But I think at the very least what the eurozone is going to need is going to be a higher inflation target because 2% for group of economies not that too genius is simply too low.</p><p style=\"text-align: justify;\">&nbsp;</p><p style=\"text-align: justify;\">Mr Tilford, thank you so much. And just to remind you our guest speaker was Simon Tilford – chief economist at the Centre for European Reform talking to us from London.</p>', created = 1508699265, expire = 1508785665, headers = '', serialized = 0 WHERE cid = '3:cfae3415f468ca8d8626330fc9a39c8b' in /home/cer/staging/includes/cache.inc on line 112.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '3:d41d8cd98f00b204e9800998ecf8427e' in /home/cer/staging/includes/cache.inc on line 27.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '', created = 1508699265, expire = 1508785665, headers = '', serialized = 0 WHERE cid = '3:d41d8cd98f00b204e9800998ecf8427e' in /home/cer/staging/includes/cache.inc on line 112.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '3:a0105a06fbb973e3b5108beee2b9f742' in /home/cer/staging/includes/cache.inc on line 27.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>\"The consequences are likely to be far-reaching. Not only will governments struggle to push through the needed reforms, but there is a risk of a broader backlash against the market economy and the European Union,\" said Simon Tilford of the CER,</p><p></p><p>The risk, however, is that these and other structural reforms become discredited because voters associate them with declining living standards and rising inequality, according to Simon Tilford, chief economist at the Centre for European Reform, a London think tank. \"The consequences are likely to be far-reaching. Not only will governments struggle to push through the needed reforms, but there is a risk of a broader backlash against the market economy and the European Union,\" he said.</p>', created = 1508699265, expire = 1508785665, headers = '', serialized = 0 WHERE cid = '3:a0105a06fbb973e3b5108beee2b9f742' in /home/cer/staging/includes/cache.inc on line 112.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '3:2778adf9e1ff3311837d4917e34b5cfe' in /home/cer/staging/includes/cache.inc on line 27.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>\"The consequences are likely to be far-reaching. Not only will governments struggle to push through the needed reforms, but there is a risk of a broader backlash against the market economy and the European Union,\" said Simon Tilford of the CER,</p><p></p>', created = 1508699265, expire = 1508785665, headers = '', serialized = 0 WHERE cid = '3:2778adf9e1ff3311837d4917e34b5cfe' in /home/cer/staging/includes/cache.inc on line 112.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '3:d41d8cd98f00b204e9800998ecf8427e' in /home/cer/staging/includes/cache.inc on line 27.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '', created = 1508699265, expire = 1508785665, headers = '', serialized = 0 WHERE cid = '3:d41d8cd98f00b204e9800998ecf8427e' in /home/cer/staging/includes/cache.inc on line 112.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '3:ce93cc6ce230422e1cfd1c41a4735734' in /home/cer/staging/includes/cache.inc on line 27.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>According to Philip Whyte, a senior research fellow at the&nbsp;CER in London, to accept that the eurozone suffers from a structural flaw that can only be corrected by more federalism is politically explosive. In his <a href=\"http://www.cer.org.uk/sites/default/files/publications/attachments/pdf/2012/essay_bankingunion_5dec12-6704.pdf\" target=\"_blank\"><span style=\"text-decoration: underline;\"><span style=\"color: rgb(0, 102, 204);\">analysis</span></span></a>, he points out that a more federal structure goes at the heart of sovereignty because it allows European bodies to dictate the fate of national banks, putting taxpayers\' money at the disposal of the eurozone to solve problems in other member states. This is the reason, the analyst believes, why it takes so much time to accept the idea of a banking union and all its implications.</p><p>It is clear that a fully fledged banking union in the euro area will not emerge any time soon, Philip Whyte writes, because political constraints are too big. Acquiescing a partial federalisation, embodied in the supervisory mechanism for the banks, however, will not solve the problems, the analyst is convinced underscoring that the rest of the bitter medicine - direct recapitalisation of banks, creating a resolution mechanism and deposit guarantees - cannot be avoided. Moreover, he explains, partial solution creates another problem - destabilisation of the EU-27 by diminishing the status of the non-euro countries.</p>', created = 1508699265, expire = 1508785665, headers = '', serialized = 0 WHERE cid = '3:ce93cc6ce230422e1cfd1c41a4735734' in /home/cer/staging/includes/cache.inc on line 112.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '3:99e4bd91606e8192f07cc9ba49dbcd04' in /home/cer/staging/includes/cache.inc on line 27.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>According to Philip Whyte, a senior research fellow at the&nbsp;CER in London, to accept that the eurozone suffers from a structural flaw that can only be corrected by more federalism is politically explosive. </p>', created = 1508699265, expire = 1508785665, headers = '', serialized = 0 WHERE cid = '3:99e4bd91606e8192f07cc9ba49dbcd04' in /home/cer/staging/includes/cache.inc on line 112.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '3:d41d8cd98f00b204e9800998ecf8427e' in /home/cer/staging/includes/cache.inc on line 27.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '', created = 1508699265, expire = 1508785665, headers = '', serialized = 0 WHERE cid = '3:d41d8cd98f00b204e9800998ecf8427e' in /home/cer/staging/includes/cache.inc on line 112.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '3:233339d68a8a06c84db000c563b06502' in /home/cer/staging/includes/cache.inc on line 27.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>\"For two decades Britain\'s EU debate has been one-sided: Eurosceptic politicians and commentators have set the agenda, while few politicians (or business leaders) have argued the merits of the EU,\" Charles Grant of the CER wrote in a recent paper. \"Pro-EU politicians have seen the short-term advantages of saying little about an unpopular subject. So they have lost the argument by default.\"</p>', created = 1508699265, expire = 1508785665, headers = '', serialized = 0 WHERE cid = '3:233339d68a8a06c84db000c563b06502' in /home/cer/staging/includes/cache.inc on line 112.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '3:e256a2ee010e8de98e588d195c312a05' in /home/cer/staging/includes/cache.inc on line 27.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>\"For two decades Britain\'s EU debate has been one-sided: Eurosceptic politicians and commentators have set the agenda, while few politicians (or business leaders) have argued the merits of the EU,\" Charles Grant of the CER wrote in a recent paper.</p>', created = 1508699265, expire = 1508785665, headers = '', serialized = 0 WHERE cid = '3:e256a2ee010e8de98e588d195c312a05' in /home/cer/staging/includes/cache.inc on line 112.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '3:d41d8cd98f00b204e9800998ecf8427e' in /home/cer/staging/includes/cache.inc on line 27.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '', created = 1508699265, expire = 1508785665, headers = '', serialized = 0 WHERE cid = '3:d41d8cd98f00b204e9800998ecf8427e' in /home/cer/staging/includes/cache.inc on line 112.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '3:3227d4f886a611271ccddf1b6a607299' in /home/cer/staging/includes/cache.inc on line 27.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>Europe\'s common security policy is \"stuck between the strategic realities of declining defence budgets, waning European power in the world and a lack of will and ability to project strategic force outward\", said Hugo Brady, a senior research fellow at the CER.&nbsp;\"And on the other side, political inertia to do serious stuff in defence.\"</p>', created = 1508699265, expire = 1508785665, headers = '', serialized = 0 WHERE cid = '3:3227d4f886a611271ccddf1b6a607299' in /home/cer/staging/includes/cache.inc on line 112.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '3:3e26c168f6a83a76ff57499d20e30887' in /home/cer/staging/includes/cache.inc on line 27.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>Europe\'s common security policy is \"stuck between the strategic realities of declining defence budgets, waning European power in the world and a lack of will and ability to project strategic force outward\", said Hugo Brady, a senior research fellow at the CER.</p>', created = 1508699265, expire = 1508785665, headers = '', serialized = 0 WHERE cid = '3:3e26c168f6a83a76ff57499d20e30887' in /home/cer/staging/includes/cache.inc on line 112.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '3:d41d8cd98f00b204e9800998ecf8427e' in /home/cer/staging/includes/cache.inc on line 27.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '', created = 1508699265, expire = 1508785665, headers = '', serialized = 0 WHERE cid = '3:d41d8cd98f00b204e9800998ecf8427e' in /home/cer/staging/includes/cache.inc on line 112.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '3:2d2a95bc47e87c107a40d6395646833f' in /home/cer/staging/includes/cache.inc on line 27.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>\"È stata una risposta un po\' emotiva - precisa Philip Whyte economista del think-tank Centre for European Reform - nel senso che i timori politici sono apparsi dominanti sulle considerazioni tecniche\".</p>', created = 1508699265, expire = 1508785665, headers = '', serialized = 0 WHERE cid = '3:2d2a95bc47e87c107a40d6395646833f' in /home/cer/staging/includes/cache.inc on line 112.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: SELECT data, created, headers, expire, serialized FROM cache_filter WHERE cid = '3:2d2a95bc47e87c107a40d6395646833f' in /home/cer/staging/includes/cache.inc on line 27.
  • user warning: Table './cer_staging/cache_filter' is marked as crashed and should be repaired query: UPDATE cache_filter SET data = '<p>\"È stata una risposta un po\' emotiva - precisa Philip Whyte economista del think-tank Centre for European Reform - nel senso che i timori politici sono apparsi dominanti sulle considerazioni tecniche\".</p>', created = 1508699265, expire = 1508785665, headers = '', serialized = 0 WHERE cid = '3:2d2a95bc47e87c107a40d6395646833f' in /home/cer/staging/includes/cache.inc on line 112.
Eurozone crisis: what steps should be taken to move forward?

Eurozone crisis: What steps should be taken to move forward?

Written by Simon Tilford, 20 June 2012
From The Voice of Russia

Interview with Simon Tilford – chief economist at the Centre for European Reform coming to us all the way from London.

 

I think a more deeply integrated financial architecture is possibly a solution. One of the reasons why the crises ran out of control in the eurozone is that bank in particular member states have a sole responsibility as the member states wherever within the eurozone as a whole. If we compare that with another big monetary union the United States, it is quite different. So, had for example the eurozone banks been protected or backstopped at the eurozone level rather than on the national level, we would have avoided the crisis in Ireland, we would have probably avoided the worst of the crisis in Spain. Now, what's happening is that unconfidence in the banks is undermining confidence in public finances as in turn weakening confidence in public finances is weakening investor's faith in the banks. And this is a sort of vicious circle that they need to break. So, shifting responsibility for backstopping banks from the national level to the eurozone level would help but it won't in itself be enough.

 

What needs to be done?

What needs to be done as a matter of urgency is for the European Central Bank to go into the market and buy a very significant amount of government debt, that's of the Spanish, the Italian and etc. in order to dispel fears of default. Until the Central Bank makes it quite plain that these countries will not default the problem will persist. So, what the ECB has to deal up first and foremost is to inject lots of money into financial market, then they need a strategy for the economic growth. Now, that is going to require a number of reforms. One we've already talked about which is a banking sector union. Another will be some form of debt neutralisation. They are going to have to become jointly responsible for one another's debt, up to a certain point at least. They should open the way for a sensible fiscal policies. At the moment what's happening in the eurozone is that countries that are in recession are slashing public spending. All that is doing is weakening our economies further, undermining confidence in the banks and in the sovereigns, in the governments. That's got to stop.

 

What the eurozone is going to need going forward is a much more flexible Central Bank that doesn't just target inflation but has a broader mandate in that, it has a mandate for levels of economic activity, not just a very narrow inflation mandate. One way of doing that which is, be it to have a higher inflation target, at the moment, first, the inflation target is too low and secondly the mandate is very, very narrow. I think it is very difficult to imagine particular member states of Europe agreeing to give the ECB a similar mandate the US had which is price stability plus the economic growth. But I think at the very least what the eurozone is going to need is going to be a higher inflation target because 2% for group of economies not that too genius is simply too low.

 

Mr Tilford, thank you so much. And just to remind you our guest speaker was Simon Tilford – chief economist at the Centre for European Reform talking to us from London.