Yet largely unnoticed amid the cut and thrust of the Brexit debate, something remarkable is happening; the corpse is showing unmistakable signs of life. These may be no more than last gasp death throes, and in any case are far too late, and as yet too small, to have any meaningful effect on Britain’s referendum vote. Nobody is pretending that the Eurozone has solved its problems and is about to rebound into rude economic health.

All the same, something is plainly stirring. In the first quarter of this year, Eurozone growth was markedly higher than both the US and the UK. Job creation too has been substantially better in recent months. That the Eurozone is finally beginning to play catch-up should come as no great surprise to close observers of economic events, for the main reason for this bounce is that belatedly policymakers have begun to apply some of the same therapies as their Anglo-Saxon counterparts. Indeed, the real surprise is that the scale of the recovery has not been greater.

Early on in the banking crisis, both the US Federal Reserve and the Bank of England sought to underpin the financial system with massive asset purchase programmes. These were bold, and substantially untried measures at the time which may still carry a quite destructive long term cost. For instance, they have discouraged people from saving while simultaneously forcing money into higher risk investment, thereby incubating financial instability for the future. Yet they broadly worked in calming the storms and preventing economic calamity.

The European Central Bank, by contrast, held back. German intransigence over anything that looked like a transfer prevented the ECB from acting like a proper central bank and monetising government debt accordingly. As a confederation of separate sovereign nations, the Eurozone seemed incapable of acting to save itself as any sensible single country would. The Eurozone had to get to the very brink of collapse before Germany and its Northern neighbours would relent. Had the ECB been allowed, like its US and UK counterparts, to apply “quantitative easing” at an earlier stage, much of the Eurozone’s existential crisis could have been avoided, or at least would have worked its way out in an entirely different way. The moment Mario Draghi, the ECB president, said he would buy government bonds without limit, the financial crisis, together with the threat of immediate break-up, began to ease.

Since then, the Eurozone recovery has followed almost exactly the same trajectory as the UK and the US. As with these earlier recoveries, growth is heavily focused on household consumption and the industries that service it. Just recently, Draghi announced he was doubling up again on measures to revive the European economy. The past year has also seen the fiscal straightjacket of the Eurozone’s initial response to the government debt crisis progressively loosened. Faced with open rebellion from the likes of Italy and Spain, Brussels has been forced to trim its demands. Fiscal targets have either been extended or abandoned altogether, so much so that this year should be mildly expansionary from a fiscal perspective, for the first time since the crisis began.

David Fuller's view

Here is a PDF of Jeremy Warner's column.

Any improvement in the economies of EU countries is obviously good news for Europeans and also the global economy.  The credit for this, I maintain, is largely due to the intelligence and persistence of Mario Draghi, against considerable opposition, mainly from Germany.  Draghi, however, only has an 8-year term which expires at the end of October 2019.

(See also: Was Draghi Correct After All? – by Bernard Tan)