Europe needs to move from fear of the \u2018moral hazard\u2019 of fiscal co-operation to confidence in its collective benefits.<\/strong><\/p>\n Europe finds itself in crisis mode\u2014again. For about 15 years crisis management has been the modus operandi<\/em> of the European Union, with each crisis appearing further to test the limits of the political will to co-operate.<\/p>\n This time, however, is different. Muddling through will not work, and the only way to overcome the crisis will be by co-operating and leveraging one another\u2019s strengths.<\/p>\n The experience of European co-operation, though, leaves much to be desired. In previous crises, such as the eurozone crisis<\/a>, it was superficial. The power imbalance between north and south was clear, as was the political outcome.<\/p>\n In a monetary union, persistent large deficits and surpluses on the current account are equally bad, requiring adjustments on both sides<\/a>. Yet only the deficit countries were subjected to painful economic strain. Overall, this induced a deflationary bias in the euro area\u2014such as John Maynard Keynes had sought to avoid in the world economy through the global financial order established at the Bretton Woods conference of 1944.<\/p>\n![\"fiscal](\"https:\/\/socialeurope.eu\/wp-content\/uploads\/2022\/11\/SE3.png\")
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