The future of the euro is bleak unless Europe does more to help to member countries that experience large adverse economic shocks, Nobel Prize winning economist Joseph Stiglitz said.
In an extract from an afterword to his book 'Freefall', published in the Sunday Telegraph newspaper, the former World Bank chief economist also said it could only be a matter of time before Spain is attacked by speculators.
"The eurozone needs better economic co-operation, not just the kind that merely enforces budget rules, but co-operation that also ensures that when countries experience large adverse shocks, they get help from others," he wrote.
"Europe created a solidarity fund to help new entrants into the European Union but it failed to create a solidarity fund to help any part of the eurozone that was facing stress. Without some such fund, the future prospects of the euro are bleak."
Stiglitz said Spain's required spending cuts will likely worsen unemployment, already at around 20 percent, and slow the economy, leaving little improvement in its fiscal position. Stiglitz said the euro lacked the institutional support it needed to make it work, but argued the single currency could be saved by the exit of Germany from the eurozone or the division of the eurozone into two sub-regions.
Comments
Comments are closed.