The 18 members of the (28 member European Union) that form the Eurozone, which share the common currency, the Euro, are in a considerable bind these days. The European Union, and even its largest and most successful economy, Germany, has barely kept out of recession. This has been going on since the beginning of the Great Recession (4Q07 to 1Q09). The Austerity (reduced government spending), which Germany has preached, has not helped. Rather it has hindered any real growth in the overall European economy.
The “Zone” has established very strict financial guidelines which every member must adhere to in order to maintain the stability of the Euro. France, the second-largest economy, however, has had great difficulty in turning itself around. Also, it has already advised the E.U. that the budget, which it is required to submit tomorrow, will be a “no-Austerity” one. French President Francois Hollande is caught because Austerity will not revitalize the economy and politically, the French People are up in arms about continuing to follow Germany’s unsuccessful philosophy.
As you can see, from the linked article in the International NY Times, even Germany realizes that Austerity will not solve the problem. In fact, it could further hinder the economic growth of other countries–including Germany–as well. The link is as follows: http://www.nytimes.com/2014/10/14/business/international/eurozone-finance-ministers-to-discuss-French-budget.html?contentCollection=business&action=click&module=NextInCollection®ion=Footer&pgtype=article.
This situation is further compounded by the fact that, if the European Commission (the executive arm of the European Union) pushes Paris too far, that could strengthen the far-right National Front (Party). At the same time, the smaller, weaker countries, which had to suffer through periods of Austerity when they sought credit bail-outs, want to see the policies and rules applied to the large countries like France, as well.
Now, last week, the International Monetary Fund, which has been clamoring for Stimulus (government spending) in Europe for some time, specifically blamed Germany for not doing enough to help spur economic growth. And on Thursday, German Chancellor Angela Merkel signaled that Germany might try a little Stimulus. But when? And, by how much?
The National Front, by the way, is part of a Center-Right movement, which exists in a number of European counties that has been calling for the break-up of the E.U,–and the Eurozone more specifically. But, after 25 years using the Euro, that would cause total economic devastation Worldwide. So, what is the E.U. to do?