Europeans see single currency as detrimental to economy
by Christina Elvers and Guillaume Xavier-Bender
Growing scepticism about the euro and more economic oversight going to Brussels revealed in new Transatlantic Trends survey by the German Marshall Fund
The worldwide economic crisis is far from over. The United States and the European Union are struggling with finding a sustainable path toward recovery. In order to face an unprecedented sovereign-debt crisis, the eurozone has created new funding instruments and is moving closer to fiscal integration by strengthening economic governance. Yet a number of obstacles still lie ahead of an efficient European Financial and Stability Facility aiding those single currency nations in trouble. The first of which is approval of the ESFS' competence by national parliaments.
As this crisis seems to be spilling over into the banking sector, renewed concerns over the survival of the eurozone as we know it proliferate. With major elections coming up on both sides of the Atlantic, how do people view the economic crisis? In Europe, what is their opinion on membership - in the European Union and in the Eurozone, in light of the crisis? Where do people want government spending to go?
To find answers to these questions, the German Marshal Fund - an American public policy organisation - conducts an annual survey Transatlantic Trends. This year, the 10th annual survey finds that while Europeans view the EU in a positive light, they see the euro as being bad for the economy. On both sides of the Atlantic, people agree that their governments should not increase government spending.
But people sceptical about the euro, not the European Union. With eurozone countries allocating more resources to the EFSF, there is worry about a rise in euroscepticism and the public wanting to leave the economic and monetary union. Our survey shows that people across Europe make a clear distinction between their country's membership of the EU and the eurozone. Some 67 per cent of the people in the 12 EU member states surveyed believe that the union is good for the economy, but only 40 per cent believe that the euro is - with 53 per cent believing it to be bad for the economy. In the UK, a traditionally eurosceptical country, which does not use the euro, only 46 per cent think that EU membership is good for the British economy. While 43 per cent believe it to be bad, 77 per cent feel that joining the eurozone would be bad for the UK.
It seems citizens want oversight over economic policies to stay with nations. But with the creation of new European mechanisms of economic governance comes the question of who should have authority over national budgets and economic policy. There is a growing fear that more EU oversight of national finances and economic policy will result in handing-over sovereignty to Brussels, therefore, moving the economic debate to the political arena. Indeed, only 39 per cent of Europeans think that the union should have more authority over member states' economic policies, while a majority of the public thinks that each member state should retain this authority. The interesting outliers here are Germany, Sweden, and the UK. In Germany, 54 per cent are actually in favour of the EU having more control. The German public and media perceive bailouts of other eurozone members as something that Germany has little or no control over. The data suggests that with Germany's influential drive of the European economy, if more authority went to the supranational level, the perception is that Germany would have more of a say as well. On the other hand, it comes as no surprise that the Brits and the Swedes - both outside the eurozone - are strongly against the EU intervening in their national economies, with 75 per cent of Swedes and 84 per cent of Brits wanting to retain the authority.
So what to do about government spending? The issue of whether to increase, decrease, or keep government spending at the current level revealed no transatlantic divide. With the polarisation of the debate in the US and greater focus – especially, from Republicans - on cutting spending, it might come as no surprise that the majority of Americans – some 61 per cent - want to see government spending decreased. In Portugal, Spain, France, and Germany, it is also the majority that wants spending cut. In the UK, only 29 per cent would like the government to increase spending, while 32 per cent would like to see it reduced and 34 per cent would like it to be kept at current levels. There is no apparent mood for Keynesian politics in Europe or the United States.
No mood for increased government spending, scepticism about the euro and giving more oversight in economic policies to Brussels – these are the results from Transatlantic Trends, which indicate that people are concerned and are becoming more inward-looking. Although, the EU retains its good reputation on economic issues everywhere - but in the UK.
Christina Elvers is programme officer and Guillaume Xavier-Bender is programme associate at the German Marshall Fund of the United States
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