Eurozone Watch » Fed-up with EMU?

by Daniela Schwarzer

A poll published today by the Financial Times reveals that a large majority of citizens in the big eurozone countries think that the euro has had a negative impact on their national economies. An example: Almost two thirds of the Germans still say they would prefer the D-Mark over the euro – eight years after the start of EMU, and five years after the introduction of euro notes and coins. And only five percent of the French think the euro has had a positive effect on the French economy. Along with data from other eurozone countries such as Spain and Italy, these figures confirm a known trend: the advantages of European monetary integration are largely underestimated.

What will be made out of his data? Firstly, policy makers in the opt-out countries (the UK, Denmark and Sweden) probably use the data to confirm that their decision taken back in the 1990s not to join the single currency was the right thing to do. Secondly, opinion makers in the Central and Eastern European countries which are supposed to be on a convergence track, may use this and upcoming data to question their country's accession to EMU (keep in mind that Poland already debates a euro referendum which would break existing community law). And, thirdly, some actors in the current EMU countries are likely to strengthen their critique of EMU. Apart from some members of the previous Italian government, not many prominent politicians will question EMU as such. However, the current French election battle has featured strong critique putting all emphasis on the ECB - its institutional status, its policy instruments and the conduct of its monetary policy.

Such reactions cover the fact that even in the FT story the picture is not all that dim. Firstly, the same poll shows that, if asked about the benefits of the euro for EMU as a whole, citizens are more positive. In Italy, Spain and Germany more citizens think that the euro made a positive impact on the EU economy, rather than a negative one. In other words: While they think there is an overall benefit of EMU, they assume it is the others that benefit, but not their own country.

Secondly, the poll does not show that the euro has created a new European environment which citizens live and experience every day. This becomes obvious to most when they are confronted with the outside world. If you are an EMU citizen, just consider how old-fashioned and impractical it is to be obliged to change money or find a cash dispenser when you arrive with euros in your pocket at the airport in Budapest, Copenhagen, London or Prague. The fact that the euro has brought Europe into the pockets and the purses of the citizens, has given many of them a clear sense that this is more than coins and notes, but a political arena where important decisions can and should be taken. This is one explanation why other polls such as the euro barometer indicate rising expectations from the citizens vis-à-vis the EU in the fields of economic prosperity and social security.

This "other" reality of EMU is so far not channelled into any political action. Political voices (among the few of them being Jean-Claude Juncker and Guy Verhofstadt) who want to tackle the problems of EMU in an encompassing manner are rare. Growing political demands are hence likely to remain unsatisfied.

This is the political problem behind the polls published by the FT. The fact that the Financial Times has given today’s top page-one story the title “Europeans still take a dim view of the euro” will reinforce many readers in their assessment that the euro was a bad thing to do. At the next possible opportunity (for instance a possible interest rate rise by the ECB in March), the French Presidential candidates will continue their ECB bashing. Likely-minded politicians may raise their voices in Portugal, Greece, Spain….

Public opinion does not fall from the sky. Most of it is made by opinion leaders such as politicians, by journalists and editors. The still rather diffuse euro scepticism today is more likely to find light-houses which direct moods down unconstructive alleys. And the more policy makers refrain from discussing the issues that indeed make EMU (and their own economies) underperform, the more they find scapegoats like the ECB or the single currency and ignore their own responsibilities, the higher is the chance that the EMU misses the chance to debate the future of EMU in a forward looking manner. And this chance is here today.