In this Big Question, we ask Willem H. Buiter, Megan Greene, Daniel Gros, and Paola Subacchi just how bitter a winter Europe should expect.
WILLEM H. BUITER The eurozone is heading for a sovereign-debt crisis.
MEGAN GREENE The eurozone is absolutely headed for another crisis, though it may not be imminent. Whether the euro project lives or dies was always going to be decided in Rome
DANIEL GROS A repeat of the euro crisis of 2011-12 is highly unlikely, because the fundamentals are completely different.
Today, Italy is running sizeable current-account surpluses, its net foreign-asset position has just turned positive, and its banks are much stronger. Given this, there was no need for the new TPI, which the ECB unveiled at the end of July. (Some have suggested that TPI actually stands for “To Protect Italy,” because no other country asked for it.) At any rate, with or without the TPI, there is little risk of another eurozone crisis.
PAOLA SUBACCHI The headwinds are surely strong. But policies to mitigate cost-of-living increases and provide a safety net to liquidity-strained companies should help minimize the risk of a winter of discontent– and a more pernicious recession – in Europe.
ProjectSyndicate 8 September 2022