Balanced growth key to future stability of the Eurozone

The 16 countries of the eurozone need to do more to underpin the credibility and stability of their common currency over time, concludes a new report published jointly by Allianz SE, a leading global financial services provider, and The Lisbon Council, a Brussels-based think tank. Dubbed The 2010 Euro Monitor: Indicators for Balanced Growth, the study evaluates and ranks the 16 eurozone countries based on their contribution to balanced growth, that is growth devoid of macroeconomic imbalances, and thus to overall euro-area stability. It is the first publication of its kind – and the first one to be published after the European debt crisis earlier this year – which provides a comprehensive overview of the current state of all eurozone countries. It ranks them according to 15 quantitative indicators in four key categories: fiscal sustainability; competitiveness and domestic demand; jobs, productivity and resource efficiency; and private and foreign debt. The Euro Monitor is designed to serve as a macroeconomic surveillance and early-warning tool, flagging up existing and emerging imbalances.

The Euro Monitor 2010 will be officially launched in Brussels on Tuesday, 26 October at The 2010 Euro Summit, hosted by the Lisbon Council, in the presence of Olli Rehn, European Commissioner for Economic and Monetary Affairs.

Says Michael Heise, chief economist of Allianz SE and principal author of the study: "Since the introduction of the euro large imbalances have developed in the union that threaten to undermine the credibility of the euro if not addressed decisively. For one, virtually all eurozone countries still face a massive task in getting their public finances back in order. Any retreat or perceived problems in progressing on this front is likely to weigh down the euro. Forceful and credible consolidation and reform programmes on the part of debt-laden countries need to be urgently implemented. There is furthermore a pressing need for improvement in the fields of structural competitiveness and productivity. We think the Excessive Imbalance Procedure proposed by the European Commission provides a good tool for preventing and correcting imbalances. But in the end the responsibility for solving the current crisis remains with national governments and the underlying imbalances will take resolute action, decisive leadership and common determination to resolve. The Euro Monitor will help to highlight the progress made in rebalancing growth down the line."

Michael Heise: "All eurozone countries still face a massive task in getting their public finances back in order"  
  • The legislative package proposed by the European Commission to tighten up eurozone governance, not only concerning fiscal policy but also macroeconomic imbalances, should be swiftly endorsed – and without excessive watering down – at the upcoming European Council.
  • As fiscal policy is under the direct control of national governments, Europe needs not only enhanced monitoring, but also reinforced fiscal policy commitment procedures within the euro area.
  • The Stability and Growth Pact (SGP) should become more rules-based, with sanctions becoming the normal consequence for countries that violate the Pact.
  • Austerity measures already announced in some member states need to be swiftly followed by structural reforms.

Copies of the Euro Monitor 2010 will be available for downloading on the Allianz website at or on the Lisbon Council website at

Michael Heise is chief economist of Allianz SE. He advises the board on economic and strategic issues, and is responsible for analysis and forecasts of the German and the international economy and the financial markets and for risk analysis. Heise graduated from Cologne University and lectured at the European Business School in Oestrich-Winkel and at the Johann Wolfgang Goethe University at Frankfurt-am-Main, where he serves as honorary professor. Before joining Allianz SE, Heise was secretary general of the German Council of Economic Experts, chief economist of the DG Bank and chief economist and head of research at DZ Bank.

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