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The Unhappy State of the Union

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The crisis has fundamentally transformed Europe’s economic and political landscape. The continent has been divided between creditors and debtors, and between euro countries and the rest. Divisions run deep within countries as well, as inequalities grow faster. Trust is low, the economics is flawed and the politics toxic. Economic recovery is modest at best; it is also fragile and uneven. Courting with deflation, with high unemployment and anti-systemic parties on the rise, and with precariously high levels of public and private debt, Europe seems to be facing the future on a wing and a prayer. What is to be done to arrest Europe’s habit of dangerously muddling through the crisis?
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  UNHAPPY UNION EUROPE NEEDS A NEW GRAND BARGAIN LOUKAS TSOUKALIS  3   The crisis has fundamentally transformed Europe’s economic and political landscape. The continent has been divided between creditors and debtors, and between euro countries and the rest. Divisions run deep within countries as well, as inequalities grow faster. Trust is low, the economics is awed and the politics toxic. Economic recovery is modest at best; it is also fragile and uneven. Courting with deation, with high unemployment and anti-systemic parties on the rise, and with precariously high levels of public and private debt, Europe seems to be facing the future on a wing and a prayer. What is to be done to arrest Europe’s habit of dangerously muddling through the crisis?This Policy Network pamphlet presents the case for a new grand bargain to rescue the European project from the perspective of an author who uniquely bridges the gap between academic analysis, policy and politics. It is published in partnership with major European thinktanks in France, Germany, Greece, Italy and Spain. Translated versions will be disseminated in all six languages.    4   Published in 2014 by Policy NetworkPolicy Network Third oor11 Tuon Street London SW1P 3QBUnited Kingdom www.policy-network.netCopyright © 2014 Loukas Tsoukalis The right of Loukas Tsoukalis to be identied as the author of this work has been asserted by the author in accordance with the Copyright, Designs and Patents Act 1988. All rights reserved. Except for the quotation of short passages for the purpose of criticism and review, no part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher. ISBN: 978-0-9928705-0-8Production editor: Michael McTernanDesign, layout & artwork: Fish Graphic Design Printing: New North  
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