Financial Times
September 16, 2013
The world should rejoice at the positive economic signals the eurozone is sending almost continuously these days. While the crisis continues to reverberate, the eurozone is clearly on the mend both structurally and cyclically.
What is happening turns out to be pretty much what the proponents of Europe’s cool-headed crisis management predicted. The fiscal and structural repair work is paying off, laying the foundations for sustainable growth. This has taken critical observers aback. It should not have, because, in truth, we have seen it all before, many times and in many places. Despite what the critics of the European crisis management would have us believe, we live in the real world, not in a parallel universe where well-established economic principles no longer apply.
Take Germany. In the late 1990s it was the undisputed “sick man” of Europe – seen by domestic and international commentators alike as uncompetitive and condemned to decline. After a boom-and-bust cycle following reunification in 1990 and its adoption of the euro at a very high exchange rate, unemployment in the country rose, hitting 5m in January 2005. Investment fell and public finances deteriorated, while politicians seemed unable to react. The decision to break this trend was a collective one, bringing together almost all parties along the political spectrum as well as employers and organised labour.
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