Is Europe ready for the next financial crisis?
With Brexit looming, stronger economic governance of the European Union is more essential than ever. It’s high time for action, says Amy Verdun, Professor of European Politics and Political Economy. Inaugural speech on 27 September.
Who helps countries that are in financial difficulty? How should we distribute refugees within Europe? Over the last decade, it has become painfully clear how hard it is for the European Union to take decisive action during complex crises. The 28 member states often have huge difficulty reaching a consensus. With Brexit approaching, this will once again put the EU to the test, Verdun warns in her inaugural lecture. Because the aftermath, possibly in the form of a recession, could have a crippling effect on the EU.
One of Verdun’s main research questions is whether Europe is prepared for a new financial crisis. The last global financial crisis showed how much of a balancing act it is for the EU: the euro is supranational, but its management is largely national. The European Central Bank may develop monetary policy, but budgetary and fiscal policy are still a mostly national affair. And although countries may need an extra financial injection, the EU itself doesn’t have such large budgets. This incomplete integration of the EU makes financial governance difficult, says Verdun.
Time for change
‘The EU doesn’t quite have it’s financial house in order,’ says Verdun. ‘It’s high time to reform the EU institutions.’ The last financial crisis may have led to new measures, such as a European banking union and fiscal measures, but Verdun believes that these are not enough. The upcoming changeover at the EU may be a good time for reform, she says. This autumn, there will be a new European Commission, a new European Parliament and a new president of the European Central Bank.
Resurgence in popularity of EU
In hard economic times, people see few advantages of Europe. Verdun: ‘People feel crushed if they are unemployed and the government is making cuts. No wonder Europe is given the blame.’ However, recent opinion polls of European citizens have shown a resurgence in support for the EU. This may relate to the unrest caused by Brexit. Verdun suspects that this may in turn mean more support for measures to strengthen the EU’s economic governance.