The political economy discussion surrounding the eurozone crisis and its aftermath often tends to focus on the immediate factors that triggered the crisis and on the institutional mechanics and changes required to address it. Yet this discussion is limited and incomplete – we need to widen the lens if we are to understand the mood in Europe today and the existential angst for the future that is dominant among many Europeans.

The common currency and the restrictions it imposes on national policymaking are often the lightning rod in scholarly analysis and in the popular debate about the future of Europe. However, the vulnerability of European economies to outside shocks and the immediate transmission of problems in the economy to dramatic political shifts far exceeds the existing problems in the functioning of the common currency or the contagion from the US financial crisis at the end of the last decade. The euro itself is typically not the source of lower growth, higher unemployment and the widespread feeling of more precarity, insecurity and even the loss of identity felt by large numbers of Europeans today.

In reality, the currency is simply a convenient and easy target. The problems Europe is facing should instead be traced to the difficulty it has in coping with global trends and shifts that are bigger than the euro or the European project more generally: the shifting flows of global value chains towards India and China, the growth of financialization, the decline of manufacturing, increases in automation and AI and the impact of climate change all heavily affect Europe’s economies and social fabric. In this respect, it is not the case that EU countries with their own currency, and even more so European countries outside the EU would cope better. Rather, there is safety in numbers; belonging to a club, and even taking advantage of the stability of a common currency, should leverage weaker or small and medium-sized countries on the global stage – assuming EU resources and institutions are aligned to the task at hand.

Dealing with technology-based globalization

Globalization has delivered prosperity and jobs in developed and developing worlds alike; at the same time it also threatens many who experience it as a “zero-sum game”.