Saturday

23rd Mar 2019

Friedman: 'Strong possibility' of euro zone collapse

Milton Friedman, the Nobel-Prize winning US economist and one of the most influential economists of the 20th Century believes there is a "strong possibility" that the 12 member euro zone could collapse "in the next few years".

In an exclusive interview with the EUobserver, Professor Friedman argues, "there is a strong possibility that the euro zone could collapse in the next few years because differences are accumulating between countries ... I'm not saying it is a certainty, just that it is a strong possibility".

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

He suggests that the euro could be replaced with the old national currencies.

New member states, new problems

His main concern with the workings of the euro zone is that it is difficult to have an economic union between countries that have substantially different economies, cultures and languages.

He believes that these problems are set to mount with the entry of the ten new member states.

Although he concedes that "actually I think that the euro has been doing quite well so far", he says that "there are problems facing it especially when you consider that you have the ten new countries in the EU".

The new countries are legally obliged to join the single currency and four of them (Cyprus, Estonia, Lithuania and Slovenia) have indicated that they intend to join it as soon as possible.

Professor Friedman believes that "there are certainly different problems for different countries" but advises, "if they are going to join, the sooner the better".

EU's economic goals are \"a nice dream\"

Professor Friedman, who played a pivotal role in shaping the US economy in the latter half of the 20th century, is not optimistic about the EU's chances of fulfilling its self-imposed economic goals known as the Lisbon Agenda.

He said, "No I do not think that the EU can catch up with the US by 2010. It is a nice dream, a good hope and I wish them well, the world would benefit".

"But I think the chances of achieving it are very slim. The rest of the world is not going to stand still. India is not going to stand still, China is not going to stand still and the US is not going to stand still".

Furthermore, he believes that the EU - and even the US - will eventually be caught up by the rapidly growing economy of China.

"It is almost certain that, at the current rate of growth, China will overtake both the EU and the US. But this is quite a long time down the road".

Stop strangling your economies

But the Professor, who was awarded the Nobel Memorial Prize for economic science in 1976, has plenty of advice for the EU.

"There is no doubt what the EU should do. Abolish your rules and regulations. Abolish your [high level of] spending. The European economy is too burdened with rules and regulations".

"There is nothing wrong with the basic strength of the individual countries. But they have burdened themselves with a range of rules that strangle their economies".

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Vestager says 'no' to Siemens-Alstom mega-merger

The EU blocked the merger of the makers of Germany's ICE and France's TGV trains, citing concerns of reduced competition and extra costs for consumers and taxpayers. The two countries now want to change the rules.

News in Brief

  1. EU leaders at summit demand more effort on disinformation
  2. Report: Corbyn to meet May on Monday for Brexit talks
  3. Petition against Brexit attracts 2.4m signatures
  4. Study: Brexit to cost EU citizens up to €40bn annually
  5. NGOs demand France halt Saudi arm sales
  6. Report: Germany against EU net-zero emissions target
  7. Former top EU official takes job at law firm
  8. Draft text of EU summit has Brexit extension until 22 May

Feature

Romania enlists priests to promote euro switchover plan

Romania is due to join the single currency in 2024 - despite currently only meeting one of the four criteria. Now the government in Bucharest is enlisting an unlikely ally to promote the euro to the public: the clergy.

Trump and Kurz: not best friends, after all

The visit of Austrian chancellor Sebastian Kurz to the White House on Wednesday showed that the current rift in transatlantic relations is deepening by the day.

Stakeholders' Highlights

  1. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  2. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  3. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  4. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  5. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year
  6. Nordic Council of MinistersNordic commitment to driving global gender equality
  7. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  8. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  9. Nordic Council of MinistersNordic talks on parental leave at the UN
  10. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  11. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  12. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID

Latest News

  1. Italy takes China's new Silk Road to the heart of Europe
  2. What EU leaders agreed on climate - and what they mean
  3. Copyright and (another) new Brexit vote This WEEK
  4. EU avoids Brexit crash, sets new date for 12 April
  5. Campaigning commissioners blur the lines
  6. Slovakia puts squeeze on free press ahead of election
  7. EPP suspends Orban's Fidesz party
  8. Macron is confusing rigidity with strength

Join EUobserver

Support quality EU news

Join us