The decision to launch negotiations on a bilateral free trade area between the EU and the US, called the Transatlantic Trade and Investment Partnership (TTIP) or EU-US free trade area is being hailed on both sides of the Atlantic as a historic development. Why have the EU and the US decided to undertake this “historic” project and at this point in time? Read more
Bruegel blog
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The Transatlantic Trade and Investment Initiative: Hope or Hype?
5th March 2013
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The Euro Area: Great Recession or Great Depression?
4th February 2013
The Great Depression was a period of severe economic contraction that lasted many years. In the United States real GDP fell every year from 1929 to 1933, when it reached only 73 percent of its 1929 level. Starting in 1934 the recovery was quite rapid, with GDP reaching its 1929 level in 1936. By contrast the Great Recession has been much milder. Read more
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Chart of the week: fiscal deficits in the euro area under the new forecast
8th November 2012
The 2012 Autumn Economic Forecast of the European Commission confirms the Spring Forecast expectation that several euro area countries, including France, will breach their commitment to return below a 3 percent deficit in 2013, unless they change their budget plans or the EU gives them more time to meet their commitment. However, most of these countries, including France, appear to be taking EU rules seriously as their structural balance figures have improved since the Spring Forecast. Read more
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Wir brauchen Licht am Ende des Tunnels
25th September 2012
Interview mit Bruegel-Forscher André Sapir über das neue Anleihen-Programm der EZB Die EZB hat ein neues Anleihenkaufprogramm, das so genannte OMT, angekündigt. Wofür brauchen wir ein solches Programm im Euroraum? Funktionieren die Anleihemärkte nicht richtig? Ja, wir haben ein Problem mit den Märkten für Staatsanleihen im Euroraum. Die Ursache dafür liegt darin, dass Investoren das Risiko eines Auseinanderbrechens der Währungsunion einpreisen. Die Märkte verharren in einem schlechten Gleichgewicht, das von selbsterfüllenden Erwartungen und Prophezeiungen geprägt wird. Deshalb verlangen die Märkte eine Risikoprämie für die Anleihen mehrerer Euroländer. So ist der Spread zwischen Italien und Deutschland wesentlich höher, als dies durch objektive Daten über die Tatkraft ihrer Regierungen erklärt werden könnte. Nach Angaben des IWF und mehrerer privater Bankhäuser liegt die… Read more
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The SMP is dead. Long live the OMT
6th September 2012
Following the various announcements of President Draghi in July and August, most analysts were expecting further clarification of the modalities of the sovereign debt purchase programme at today’s ECB meeting. They will not be disappointed. Read more
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Chart of the week: the fiscal stance in the euro area
25th June 2012
The size of the deficit reduction mandated by European fiscal rules for euro area countries currently under excessive deficit procedure will be on average nearly 1.5 percent of GDP per year in the next two years. While such adjustment would not be overly restrictive in normal times, it is undesirable in countries that are already in recession. The risk is particularly important in Cyprus and Spain which need to undertake cumulated fiscal adjustments of more than 6 percentage points of GDP in 2012 and 2013 in order to satisfy European fiscal rules. Read more
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EU - euro area governance – a messy rebuilding
6th April 2012
The euro crisis, and the subsequent policy response, have created challenges for the governance of the euro area and the relationship between euro- and non-euro EU countries. Further governance changes may become necessary to restore the financial integrity of the euro area. This could increase the tensions between euro-area 'ins' and 'outs'. The euro's pre-crisis governance model was based on three assumptions: first, that the euro only required delegation of monetary policy to the common central bank and the avoidance of excessive budget deficits in addition to European Union single market provisions; second, that governance could be grounded on rules-based prevention only, and that there was no need for crisis management; third, that all EU countries would eventually join. This… Read more
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The great Franco-German divide
4th April 2012
One of the features of the German socio-economic model is its vitality in terms of exports. In this respect it contrasts sharply with France. In 2000, German and French goods exports amounted to respectively 8.7 and 7.5 percent of world trade. Ten years later France's share of global trade was barely 3.4 percent. It would be tempting to ascribe this decline to the rise of China, which in the meantime advanced from seventh to first position in the export league. But then how can we explain that Germany managed to preserve its share almost unchanged? Another way to compare countries' export performance is to compute their ratio to gross domestic product (GDP). In 2000, German and French goods exports amounted… Read more
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Can the G20 save globalisation?
3rd April 2012
The current of wave of globalisation that started at the end of the twentieth century has a lot in common with the previous wave that began one century earlier. The same factors are behind both: technological change and political decisions to open up markets for freer trade and capital movements. Likewise both created huge economic opportunities and wealth, but also huge economic and political tensions within and across countries. Domestic tensions arise because not everyone in a country is able to take advantage of the opportunities created by globalisation and some clearly lose out from technological change or freer trade. International tensions result from an unequal distribution of the gains and pains from globalisation across nations. During the first wave… Read more
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EU carbon levy: try to avoid air turbulences
15th March 2012
On March 12 the CEOs of Airbus and of eight other European aviation and airline companies urged the leaders of France, Germany, Spain and the UK to solve a dispute with the US, China, India, Russia and 23 other countries over the inclusion of foreign airlines in the European Emission Trading Scheme (ETS) that was extended to the air industry on January 1, 2012. The European CEOs warned that the dispute could lead to foreign retaliation in the form of suspensions or cancellations of orders for European aircrafts that would cost jobs to Europe. The fear of a trade war between the EU and its foreign partners had already been aired the week before by the head of the International… Read more