Europe at the crossroads of the COVID-19 crisis: integrated macroeconomic policy solutions for an asymmetric area

Abstract

The economic crisis triggered by the COVID–19 pandemic once again raises doubts about the eurozone’s ability to deal with joint economic problems given its dissimilar dynamics and asymmetries. This chapter contributes to a paradigm shift in the governance of the euro area towards a more comprehensive and integrated approach. Two dimensions of this paradigm are considered. First, the need for a change in the economic policy concerning the recovery, from a supply-push to a demand-pull orientation, supported on a fiscal and monetary policy mix, integrated within a comprehensive macroeconomic approach. Second, we examine the need for a shift in external relations towards a more global integration-oriented policy, with the euro area positioning itself as an alternative to the current polarization between the United States and China. Our conclusions point to: (i) giving priority to growth and employment; (ii) promoting long-term economic sustainability based on integrated macroeconomic policies, the reduction of income concentration, and the reconstitution of strong middle classes; (iii) reorientating international relations into a perspective of cooperation; (iv) reinforcing regulation and global governance; and (v) eliminating exceptional situations and ways to evade economic controls.