Eurozone needs growth in the short term — but can Germany provide this?
Over the longer term, much more needs to be done, including closer fiscal integration and some sort of eurobond. Given that both of these will require treaty change, it is not surprising that politicians have put them on the long finger for the time being.
Anti-euro sentiment has been on the rise over the past few years, both in the periphery and at the core. It would be very difficult to push through any changes now.
But what is needed over the short term is growth. There have been acres of print devoted to the role of Germany in the resolution of this crisis.
While some of the criticism of Berlin has been unfair, there are legitimate concerns about the way its economic policy is shaped.
The country seems wedded to an export-oriented model. The idea of boosting domestic demand finds implacable opposition across almost every strata of German society.
The Bundesbank wants the ECB to focus on fighting inflation. If Mario Draghi had followed this advice then the euro would have unravelled by now.
In other words, the German government formulates policy as if it was still a nation state without any wider responsibility and certainly not as a member of a heterogeneous 17-country currency bloc.
One of the biggest causes of the debt crisis was current account imbalances between the member states. This still has to be addressed.
Despite years of rhetoric and bluster, the region is no closer to having a single market for services.
Moreover, the services sector in Germany remains woefully under-developed.
Also, the German economy badly needs investment in infrastructure, research and development, and third-level education among some other key areas.
But instead of investing public money, or at least trying to stimulate private sector investment, the debate over the past few years has been about balanced budgets and fiscal discipline.
The energy sector is a case in point. Chancellor Angela Merkel has committed the country to weaning itself off nuclear energy by 2022 to be replaced by renewable forms of energy.
Some would argue that this is a laudable aim, but without massive levels of investment it remains nothing more than a pipe dream.
And if there is one thing that will erode a country’s competitiveness, it is insufficient energy supplies.
Berlin needs a change of mindset very soon, not just for the sake of the eurozone but also its own future.
Maybe that will come after the elections.
