The Stability Pact – intended to make EMU governments run prudent budgets – is losing its credibility.
This essay asks the question: what will happen if national debts start to rise again and some governments then have difficulty borrowing?
It suggests that there will be calls for bailout, that the EU’s political structures will not cope well with the resulting arguments over which countries will pay,
and that the eventual and painful result will be the re-establishment of national currencies.
Bernard Connolly and John Whittaker, 3 October 2002, revised 6 November 2002