Greater risk of social and jobless crisis within eurozone

There is a greater risk of social and unemployment crisis among countries in the eurozone than those outside it, and this threatens to undermine the euro itself, warns employment and social affairs commissioner László Andor.

Its current design means that different countries will be at different stages of the economic cycle at different times while the ECB’s mandate of price stability makes it difficult to reduce the imbalances between creditors and debtors, he told a seminar organised by the European Policy Centre.

The euro area is poorly equipped to deal with asymmetric shocks such as excessive capital inflows and bursting of construction or finance bubbles, because there are no fiscal transfers between eurozone countries that are temporarily strong or weak.