A workable euro zone fitness regime

By Hugo Dixon
February 17, 2014

The euro zone has gone from the emergency room to rehab. As often with patients, the question is how to maintain a stiff exercise regime now the immediate danger is over.

QE is the way for the ECB to go

By Hugo Dixon
February 5, 2014

The European Central Bank needs to start taking the risks of deflation more seriously. This danger should be top of its agenda when its governing council convenes for its monthly meeting this week.

Europe’s post-crisis challenge

By Hugo Dixon
December 16, 2013

The hot phase of euro crisis may be over. But the zone will limp on for years with low growth and high unemployment unless further action is taken on three fronts: bank balance sheets must be cleaned up, monetary policy loosened and more free-market reforms adopted.

Italy has two chances post-Berlusconi

By Hugo Dixon
December 2, 2013

Italy seems continually condemned to disappoint. The economy has barely grown in 20 years. The younger generation is languishing without opportunity: youth unemployment stands at 41 percent. So many chances to reform the country have been wasted – and many by Silvio Berlusconi, who was finally expelled from the Senate last week after being convicted of tax fraud.

Athens can capitalise on market interest

By Hugo Dixon
November 18, 2013

Greece has been the markets’ whipping boy for most of the past four years. But in the last few months, sentiment has changed and international investors are bottom-fishing – in particular for banking assets.

Greece’s reform job isn’t even half done

By Hugo Dixon
November 11, 2013

Greece’s reform job is not even half finished. The government hasn’t done enough to root out the vested interests that strangle the economy. Nor has it cracked down fully on tax evasion or pushed hard enough to privatise state-owned properties.

ECB really must act on deflation

By Hugo Dixon
November 4, 2013

The case for looser monetary policy should be clear when the European Central Bank governing council convenes in Frankfurt on Thursday. The question is what tools to use: lower interest rates, spraying the banks with more cheap long-term money or the ECB’s first dose of “quantitative easing”. The answer should be a mixture of all three.

Bundesbank right to focus on doom loop

By Hugo Dixon
October 7, 2013

Germany’s Bundesbank is not afraid of playing the role of bad fairy. Last year it opposed the European Central Bank’s scheme for buying potentially unlimited quantities of sovereign bonds – a promise which ended the hot phase of the euro crisis. Last week, it criticised rules that encourage euro zone banks to load up on their own governments’ debts.

Euro zone needs anti-boom activism

By Hugo Dixon
September 23, 2013

A big problem with the euro zone’s one-size-fits-all monetary policy is that it risks fitting nobody. That, indeed, was a key cause of the crisis. Early in the century, countries such as Spain and Ireland were booming, while Germany was in the doldrums. Setting interest rates at a level that worked well for the euro zone on average had the effect of inflating the Spanish and Irish property bubbles while pushing up wages so their economies became uncompetitive. When the bubbles burst, the damage was devastating.

How to legitimise EU: decentralise

By Hugo Dixon
July 22, 2013

The European Union is facing a crisis of legitimacy. This is evidenced in a decline in support for the EU among citizens in pretty much every member country. The most extreme manifestation is in the UK, where pressure is mounting to quit the EU.