It’s frustrating that the Eurozone can’t seem to get their
act together and to use their collective economic strength to deal with the
difficulties currently being faced by quite a small component country of the
zone (i.e. Greece). In order to check out whether my intuitive feelings were
massively wide of the mark I decided to look for myself at the figures that
would illustrate the dimensions of the problem and to consider the potential
for political action to address it.

I think it’s pragmatic to surmise that establishing the euro
as a sovereign currency reflects a nascent common sovereignty for the countries
of the zone in which it operates. On this basis it’s appropriate to consider
the para-statal financial circumstances of the Eurozone as a context for
dealing with ‘the Greek crisis’. The compilation of statistics presented in
Table 1 makes a start.

The figures in the table represent the situation across the
18 countries of the Eurozone in 2014 (Lithuania joined at the start of 2015).
The first thing to notice is the dominant position that devolves upon the four
largest countries: Germany, France, Italy and Spain (the Big4). Together the
Big4 account for over three-quarters of population and GDP as well as state
revenues and government debt across the zone as a whole. And the idea that the
Big4 effectively represent a core or centre-of-gravity for the zone is reflected
by the fact that their aggregate statistics for activity rate (Emp/Pop),
economic significance of the state (GRev/GDP), weight of government debt
(GGD/GRev) and average income (GDP/hd) are all very close to the figures for
the Eurozone as a whole.

The size of the state relative to the economy as a whole
varies quite widely across the Eurozone. Overall within the zone government revenues
equate to 46.7% of the total GDP. But in some countries the share is less than
40% (Ireland, Latvia and Spain are the lowest) whilst in others it is more than
half (Finland, France and Belgium are the highest). Luxemburg, Ireland and Austria have the highest GDP/hd; Latvia,
Slovakia and Estonia have the lowest; the variation is extremely wide. Given
the current focus on Greece, it is interesting to see that the activity rate
(the fraction of the population in employment)
is lowest there (32.2%) whilst the burden of government debt in relation to the
size of government revenue is highest there (406.4%).

Since ‘the Greek crisis’ has
concentrated so heavily on government debt it is worth noting that across the
Eurozone as a whole such debt is equivalent to about double the annual revenue
of the state sector (201.3%). Aggregate statistics for the countries with a state
debt more than 250% of government revenue (Cyprus, Greece, Ireland, Italy,
Portugal and Spain) indicate lower-than-average activity rates and GDP/hd, as
well as a relatively smaller-scale government revenue stream. It’s notable that
2 of the Big4 countries, Italy and Spain, are members of this group.

Turning to an explicit treatment of the Eurozone as a
sovereign area with component country-regions, some proportional figures are
presented in Table 2.

Although all the recent fuss has focused on Greece, it’s a
small part or minor region of the overall Eurozone economy. It is interesting
to observe how closely the various countries’ shares in total Eurozone
government debt mimic their shares in the total population of the zone. Greece,
for example, is 3.3% of the Eurozone population and accounts for 3.4% of total
Eurozone government debt. Germany has 24.4% of the population and 22.4% of the
debt. France has 19.2% of the populace and 21.5% of the debt. Spain has 14% of
the people but only 10.9% of the debt. The countries (regions) whose shares in
the debt are significantly higher than their share in the population are
Ireland, Belgium and Italy. The virtuous, frugal countries (regions), whose
shares in the debt are significantly lower than their share in the population,
are Estonia, Latvia and Slovakia.

Maybe it’s time for the Eurozone to redouble its efforts to
achieve integration and to assume common responsibility for all the government
debt across the countries (regions) of the zone. Because the most heavily
indebted countries (CGIIPS) are dominated by two of the Big4 (Italy and Spain)
it should be possible for these two to broker any such deal, from which the solution
to ‘the Greek crisis’ would emerge as a relatively minor by-product. Doubtless
common fiscal rules and procedures required as part of such a deal would take a
long time to harmonise (with plenty of scope for transfer of good practice
across member states) but since this might effectively amount to much the same
in time-scale terms as debt rescheduling, and since it might much more readily
be presented as (if not actually constituting) progressive development rather
than palliative care, this ought not to detract from the substantial achievement
that such an agreement would create. The opportunity for established
governments in Italy and Spain to demonstrate constructive leadership to their
own electorates at a time when they are under pressure from radical alternative
challengers ought to encourage this sort of initiative. But I’m not holding my
breath.