Though concerns about the new U.S. President-elect Donald Trump are dominating the news, Europe still has another pressing problem: the euro.
The euro crisis isn’t over yet, nor will it be until southern Europeans reduce debt, say economists Clemens Fuest and Tomáš Sedláček. They talked with Handelsblatt about how to deal with nations in debt at a meeting of Lupus alpha, the investment management firm based in Frankfurt. Like the old adage ask two economists for an opinion and you’ll get three, they had differing suggestions for how to go beyond that, in a wide-ranging discussion about economic policy.
With growth slowed in southern Europe, Mr. Sedláček, an award-winning writer and chief economist at the Czech ČSOB bank, said it makes little sense to impose penalties on countries that then will have to pay these back with further debts.
“The problem, though, is that in the euro zone we have mutualized our monetary policy but not our fiscal policy,” he said. “I believe that governments should also not be responsible for fiscal policy if they can’t print money. Only tax policy should remain in their hands.”