Five years after the 2008 Eurozone crisis Europe still has a lengthy road to recovery, but it might start seeing some light at the end of the tunnel in 2013. Indeed, many of the gloomy forecasts did not come true. Europe is still in one piece and the Euro did not crash.
While, we don’t believe the Eurozone will break up in 2013, it will have a challenging year ahead. The Eurozone will need to focus on strengthening its institutional framework and overcoming the crisis through domestic austerity measures.
In effect, European leaders have recently agreed to support a package of measures which will promote growth, entrepreneurship and youth employment, worth 120 billion euros.
Yet restoring competitiveness to the European Union will not be a piece of cake. There will be continued pressures for stern reforms and budget cuts in Greece, Portugal, Spain and Italy. Bigger problems for the EU could also arise should its larger nations such as France kneel to the crisis. And the question remains, what will be Germany’s role in the Eurozone in 2013. Will it continue marching ahead?
Thus far, Germany has played a leading role during the Eurozone crisis to try to keep the union together. Yet, the crisis has led to growing tensions between Europe’s nation states, which have exposed divides thought to have been eliminated by the creation of the European Union.
As Europe prepares for Eurozone 2.0, it will have to balance smart and inclusive growth with smart austerity measures. Indeed, to overcome its challenges, the Eurozone needs to take the time to reflect on its policies, to focus its objectives and consider whether the European utopia of solidarity, stability and integration is a broken promise?
Come and join us for the Eurozone debate at the Open Forum 2013 in Davos on 25 January to hear what panellists, including Vittorio Grilli, Angel Gurria, Guido Westerwelle and Robin Niblett, have to say about the matter and consider how the diverging interests of European nations can be reconciled.
Authors: Selima Benchenaa is Senior Programme Manager, Global Leadership Fellows Programme, at the World Economic Forum. Tiffany Misrahi is Senior Associate, Global Agenda Councils, at the World Economic Forum.
Image: An illuminated euro sign in front of the European Central Bank headquarters in Frankfurt REUTERS/Kai Pfaffenbach