From Brexit to Frexit? Why Germany holds the key to keeping the EU together
Andrew Sheng says populism has yet to overcome post-Brexit Europe but fragmentation is still a possibility, which is why top economy Germany must be more generous in leading the euro zone out of problems in finances and job creation
But a populist swing is doubtless on, driven by high unemployment, terrorist attacks, immigration concerns and depression in southern Europe.
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But, by 2007, when the US subprime crisis triggered the European debt crisis, the euro zone’s flaws and institutional inadequacies were all brutally exposed. First, although there was a single central bank, there was neither a fiscal nor a banking union, meaning there was no centralised tax and banking policy to deal with failing national banks.
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As the southern economies of Portugal, Ireland, Greece and Spain tried to bail out their banks, they incurred massive sovereign debt, which could only be sustained by ever lower interest rates.