Stuck: The Politics of Euro Reform in Post-Pandemic Europe

Lucio Baccaro and Björn Bremer

The coronavirus pandemic poses a new existential threat to the integrity of the eurozone. The most critical country seems to be Italy, where in the absence of debt mutualization (either explicitly through eurobonds or coronabonds, or implicitly through the balance sheet of the European Central Bank) public debt is destined to further increase and a new financial crisis may emerge. Years of prolonged economic stagnation have led to a general disenchantment with the euro in Italy. Faced with the extra costs of Covid-19, Italian voters may prefer leaving the single currency to remaining in it, especially if the response to the crisis involves harsh austerity policies. The emergence of a credible threat of exit may either create an opportunity for the establishment of joint fiscal capacities, or break the common currency apart. This project studies preferences for the euro through survey experiments in Italy, Germany, and other European countries.