The days of the European Union as we know it are numbered. From Andrew Bosomworth, managing director of Pacific Investment Management Company, the world’s largest bond fund management company:
The lesson from history is that the status quo we have now is not a tenable structure. There’s no historical precedent that this sort of structure, which is centralised monetary policy, decentralised fiscal policy, can last over multiple decades.
[Persistently low growth] manifests itself in a lack of support in the common currency, so then it leads to the rise to power of political parties that want to end it.
That’s what we seen in the last few years. [Populist parties have] risen from zero to be a considerable force. In Greece’s case to form a government.
This means we’re in a critical situation, because you cannot just plaster over these people’s concerns, there needs to be a political response as well, which involves addressing the question: what is the ultimate future of the monetary union?
You need to reach some sort of political agreement about how to share fiscal resources around the zone. We’re a long, long, long way from designing that and getting the political backing for it.
So while you’re waiting for that and you’ve got low growth, and high unemployment, you run the risk of letting these anti-euro parties to the forefront.
