Any financial system reform for the European Union that involves creation of a transfer union, putting Europe’s prudent countries on the hook for profligate counterparts, faces a few rather large obstacles in Central and Eastern Europe. That’s according to the new analysis from the Leibniz Centre for European Economic Research (ZEW) in Mannheim, Germany, warning that attempts to further consolidate the EU’s financial structure would likely have the opposite result, deterring Eastern European countries from joining the euro zone and contributing to the centrifugal forces already threatening the euro (via Google Translate).
- The survey polled around 1,800 economists across Central and Eastern Europe, Germany, Italy, and France about a variety of proposed measures including relaxation of the Stability Pact and creation of a common insolvency procedure, with an eye to the long-term collectivization of government debt across the euro zone.
- Economists from Central and Eastern Europe (CEE) were markedly more skeptical about creation of a transfer union than counterparts from Germany, Italy and France.
- By contrast there is more support among CEE economists for stabilisation measures such as European unemployment insurance.
- These findings put Eastern Europe at odds with, among others, French President Emmanuel Macron, who has long advocated creation of an EU transfer union.
- The ZEW study notes that GDP in the Eastern European countries surveyed is in many cases poised to surpass Southern European GDP in per capita terms, and have also largely managed to meet EU debt targets and deficit limits.