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THE STATE OF THE EUROPEAN UNION
42
the positive effects of any eventual depreciation
of the euro.
In light of these circumstances, the European
Union, and most of all its eurozone members,
must act to correct the troubling weaknesses of
the present state of the EMU. Despite the ef-
forts of the ECB, equal access to credit within
the EU has not been achieved. Companies in
southern member states still have a tougher
time securing financing than their counterparts
further north. While there has been encourag-
ing rhetoric on the part of politicians and econ-
omists, the investment and support for produc-
tivity and competitiveness needed to generate
quality sustainable employment has not been
forthcoming. Although European companies
have generally managed to continue meeting
overhead and other expenses, austerity meas-
ures have hurt sectors that must demonstrate
medium- and long-term competitiveness, espe-
cially in southern eurozone and Mediterranean
countries. If economic stagnation in France and
the delicate state of Italian banking system were
not troubling enough, Greece continues to
struggle to recover not only from the crisis of
2008 but also the overdose of austerity meas-
ures that followed. The austerity regime im-
posed on countries such as Spain, in which only
a minor reduction of public and private debt has
been achieved at the cost of wage stagnation,
the erosion of employment stability, an incalcu-
lable rise in the number of families pushed to
the brink of poverty and a dramatic increase in
the percentage of the working poor, is clearly
not the best recipe for ensuring sustainable
growth and strengthening social cohesion.
Countries such as Spain cannot afford the luxu-
ry of basing their economies solely on strategic
sectors subject to shifts in international eco-
nomic and geopolitical trends such as tourism
or exportation instead of investing in education,
digitalisation, job creation, competitiveness, re-
search, development and innovation, at a mo-
ment at which they are suffering rising levels of
social inequality and poverty that threaten the
prospects of a rebound in domestic demand.
The eurozone must have instruments of fiscal
policy
The asymmetric realities of northern and south-
ern eurozone countries underscore the lack of
instruments with which to address simultane-
ous but distinct problems within the group.
Monetary policy cannot correct these problems,
and although fiscal policy could be used to ad-
dress them, northern states have relentlessly
blocked the implementation of measures capa-
ble of reactivating investment and demand in
the southern states hit hardest by the crisis.
Spain, for example, has yet to bring its GDP
back to its 2007 level, and when it finally man-
ages to do so later this year after a decade of
budget tightening, it will be against a backdrop
of unemployment and loss of social cohesion
impossible to imagine prior to the onset of the
crisis. Employment opportunities in Spain going
forward will be of poorer quality, more precari-
ous and pay less. The country will be less equi-
table, with a growing percentage of its active
workforce moving from one precarious job to
the next and unemployed workers over 45 and
young people in need of training trapped on the
threshold of poverty with diminishing hope of
improving their lot.
Reducing these disparities will require invest-
ment, monetary transfers and local countercy-
clical policies tailored to tackle specific problems
such as long-term employment and the need to
strengthen worker qualifications – actions that
the EU has been loath to undertake to date.