By Re-Define Managing Director Sony Kapoor and Fabrizio Tassinari at the Danish Institute for international studies. Note: this has appeared as an op-ed in the European Voice
Ways that the EU could unleash the animal spirits of the markets to trigger self-financing green investments.
Can green growth shake Europe out of its economic stagnation? At face value, Denmark is not the most obvious candidate to answer this question. The UN climate summit that Copenhagen hosted in 2009 was supposed to herald a new era of international responsibility; instead, it has become a byword for discord between a declining West and emerging economies.
By Re-Define Managing Director Sony Kapoor and Peter Bofinger, member of the German Council of Economic Advisers. This appeared as an oped in Financial Times Deutschland, NRC Handelsblad, Politiken, The Guardian, Die Presse in the first week of February 2012.
The EU needs a growth compact, not a fiscal one. Swift action on tax and jobs is the way out of the crisis
Overspending by governments, we have been told, triggered this crisis. The cure thus lies in immediate austerity, hence last month's German-led push for a eurozone fiscal compact and the UK's pursuit of similar policies.
But, as demonstrated by the experiences of Greece, Portugal and Spain, this course leads to biting, deep recessions and worsens public indebtedness. The IMF acknowledged as much last week. A focus on growth, not austerity, is the correct answer for Europe's ills.
Sony Kapoor, Director of Re-Define & Peter Bofinger, Member of the German Council of Economic Experts
Dated the 30th of January 2012
THE CONTRACTING PARTIES………….
CONSCIOUS of the need to tackle the unprecedented social, political, economic, employment and institutional challenges confronting the Union, and
RECOGNIZING that promoting growth is the best possible way of rising up to these challenges, thus
DESIRING to kick-start growth in short-term and construct structures and implement policies that put the Union on a path of higher growth in the long-term, especially as only growth will create the economic and political space to enact the serious structural reforms the Union needs, and
This appeared as an opinion piece in the Danish newspaper Börsen on 13/1/2012
The EU’s response to the most serious crisis of our lifetimes is failing. The austerity-only path we have embarked upon is a road to recession with deeper unemployment, welfare losses and increasing social frictions.
When excessive levels of Greek debt were first revealed at the end of 2009, it was shocking how quickly the narrative of the crisis changed from one of a financial crisis to that of a fiscal crisis. This change was driven by politics and ideology where leaders in some countries found it easier to blame ‘lazy Greeks’ for the crisis rather than address endemic problems in their banking system. The weakness of the financial sector was pushed out of sight and Europe is now paying the price. Despite enjoying unprecedented public support, the EU banking system remains broken and is failing in its job of supporting the real economy.
This appeared as a Comment piece in the Observer (Guardian) on 11th December
EU leaders promised to stop Europe’s spiral into economic oblivion. They needed to immediately restore confidence in the solvency of Spain and Italy, urgently take steps to kick start growth and credibly commit to changes addressing the institutional weaknesses of the Euro area. They failed on all three fronts and are now almost out of time.
Given the inability of EU leaders to tackle the problems of Greece, a small economy, investors have been losing faith in their ability to support the much larger economies of Spain and Italy that faced economic problems. This has driven up the borrowing costs to unsustainable levels. Unless policy makers can demonstrate how troubled EU economies could meet their borrowing needs at non-penal interest rates, the crisis would continue to deepen.