Ian Preston, Deputy Director of CReAM and Professor of Economics at UCL, puts forward the case for freedom of movement within the European Union. He explains how freedom of movement and economic migration is important for a dynamic and innovative economy, but it also brings with it redistributive considerations that cannot be ignored. At a time when many politicians conflate economic migration and asylum-seeking refugees, he argues that the two are perhaps not entirely distinct from one another – and discusses reasons why they shouldn’t be treated as one group.
Some economic advantages of free movement of labour
Free movement of labour, in the sense of absence of restriction on European citizens’ rights of location for the purpose of work, has been a longstanding goal of the European Union. But this goal has come under increasing attack, from a variety of directions. Critics include not only those hostile to European Union membership but also some who are professedly sympathetic to membership but who appear sceptical about the benefits or long term viability of unrestricted cross-border mobility of people in modern Europe.
Judged in economic terms, the case for free movement of labour, within or between countries, is strong since mobility of workers has compellingly positive aspects. Continue reading
Ashoka Mody, Visiting Professor at Princeton University and former Deputy Director in the IMF’s Research and European Departments, critiques the IMF report published on 2 July, on the eve of Greece’s referendum. This report found that Greek debt was not sustainable and deep debt relief along with substantial new financing was needed to stabilize Greece. This report, according to Mody, reveals that the creditors negotiated with Greece in bad faith. He suggests that the Greek debt burden is much greater than portrayed by the report, and that the policy measures proposed to reduce that burden, including more austerity, will make matters worse. This article was first published on bruegel.
On 2 July, the IMF released its analysis of whether Greek debt was sustainable or not. The report said that Greek debt was not sustainable and deep debt relief along with substantial new financing were needed to stabilize Greece. In reaching this new assessment, the IMF stated it had learned many lessons. Among them: Greeks would not take adequate structural reforms to spur growth, they would not sell enough of their assets to repay their debt, and they were unable to undertake sufficient fiscal austerity. That left no choice but to grant Greece greater debt relief and to provide new financing to tide Greece over till it could stand on its own feet. The relief, the IMF, says must be provided by European creditors while the IMF is repaid in whole.
Media coverage of the talks between Greece and its Eurozone partners sounds increasingly alarming, but there is no need to run for cover. Filipa Figueira explains why we don’t need to panic about Greece.
The past few months have seen a series of make-or-break meetings between Greece and the other Eurozone countries – culminating on 24 April with a tempestuous Eurogroup meeting in Latvia. There, finance ministers allegedly accused Greek Finance Minister Yannis Varoufakis of being ‘a gambler, a time-waster and an amateur’, and blocked their ears while he was speaking to show their despair. This led Prime Minister Alexis Tsipras to reshuffle the negotiating team – Mr Varoufakis has not been fired, but was sidelined, as Deputy Foreign Minister Euclid Tsakalotos will now be heading the negotiations with the Eurogroup.
So are we approaching ‘Grexit’? Most probably not.
With the Eurozone crisis not yet over, Albert Weale, Professor of Political Theory and Public Policy at UCL, reviews the Hertie Governance Report 2015 as it analyses the key issues facing the European Institutions in terms of economic governance. As ad hoc solutions are found to deal with urgent matters, what does this mean for political accountability and reform in the EU, and what lessons have been learnt?
The European financial and economic crisis since 2008 has overturned the normal workings of the central institutions of the European Union. The policies and practices established in the Maastricht Treaty and the Stability and Growth Pact (SGP) have been transformed in a seemingly endless series of improvised measures. National budgetary and economic policy planning are coordinated through the European Semester. Stronger preventive and corrective procedures are in place through a reinforced SGP. Member States now have a treaty requirement to have automatic correction mechanisms for budgetary deficits. The European Stability Mechanism operates as the de facto bailout mechanism for national governments, a function at one time prohibited by the Maastricht Treaty. The European Central Bank is now engaged in outright monetary transactions, a policy that comes close to monetizing government debt. Banking supervision has been reformed.