The euro’s Lazarus moment

“The euro crisis has receded, leaving quite a lot of egg on (mostly) Anglo-Saxon faces,” begins Philip Stephens in the Financial Times, as news emerged that the embattled currency hit a new 14-month high against the dollar, raising hopes that region’s downturn had eased. “Brits and Americans were in the vanguard of the gloomsters,” he says, adding, that although the bloc still has serious economic challenges such as low growth, chronic unemployment and a pile of public debt, “In the event, reports of the demise of the single currency proved greatly exaggerated.” Analysing where the doom-mongers went wrong, he says –

The obvious mistake was to underestimate the political will of the European leaders to keep the show on the road... Behind the austerity, the bailouts and the new funding mechanisms has lain serious determination. During one sticky episode last year, I heard a German official say how lucky it was Britain had stayed out of the euro. Had it joined, it would have run away at the first whiff of cordite.

He believes the second reason why the nay-sayers went wrong was because they failed to appreciate that the euro model would adapt to survive.

The eurozone, pessimists said, faced a simple binary choice. It could become an economic and political union - a united states of Europe - or it was doomed. Since it was obvious that Germany, France and the rest were not about to abandon their national identities, it was easy to conjecture that the euro was a currency without a future. No one can be sure that the currency will survive in perpetuity... But at least we know now that the politicians will not give up without a pretty ferocious fight.

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