Eurozone: What could trigger another crisis? - Natixis

Patrick Artus, Research Analyst at Natixis, suggests that there can be another crisis in the euro zone like the one in the period 2010-2013 and lists down the possible causes of another crisis in the euro zone.

Key Quotes

“Renewed external deficits for the peripheral euro-zone countries if capital mobility between the euro-zone countries is not restored, as these deficits could then not be financed and there would again be a balance of payments crisis. Spain’s trade balance is now deteriorating.”

“Rising long-term interest rates that would jeopardise the fiscal solvency of some euro-zone countries and trigger another sovereign debt crisis. At present, fiscal solvency is ensured with a quite large safety margin in all the countries (France being the most fragile country on this point).”

“A marked decline in euro-zone growth, for example as a result of the unemployment rate returning to the level of the structural unemployment rate and growth returning to the level of potential growth, which would discourage non-resident investors, especially in equities, as we saw in 2014 and in 2016. Currently, one cause of concern is the level of companies’ recruitment difficulties, which may indicate that the unemployment rate is close to the structural unemployment rate.”