9. Conclusion: Out of the Present European Crisis: Questions and Alternatives

Economic stagnation is now endemic in Europe in the aftermath of the recession that followed the 2008 financial crisis. Responses to the crisis have thus far focussed on financial issues. European leaders averted the collapse of banks and bankruptcy of member governments by organising emergency financial support. New frameworks for regulation of banks and other financial institutions were introduced in parallel with efforts in the USA and other high income countries. But measures to bolster financial stability have not been adequate to launch a general recovery of growth and investment in Europe. Unemployment remains high while government services and social benefits are being cut in most countries. Budget cuts have depressed spending without achieving long-term reforms in public finances. Nor have they been effective thus far in reducing government debt relative to GDP. Debt ratios can be expected to fall gradually but the adjustment will be a long painful process and countries in Europe will share the cost directly via depression of their trade and investment.