The global financial crisis and the European Union

The EU swept into the twenty-first century on a wave of optimism. To be sure, reservations were raised about the structural and institutional flaws in the Economic and Monetary Union (EMU) design. Yet, these reservations did not resonate in ‘official Europe’, which responded to post-Maastricht issues such as the ‘democratic deficit’ and eastern enlargement with an incremental approach to constitutional reform. Politicians and journalists voiced few misgivings about the monetary union, and the academic establishment fewer still. Extravagant claims about the benefits of EMU were made whilst warnings were ignored. A new ‘European Century’ was thought to be emerging, spearheaded by the launch of the third stage of EMU, geographical enlargement, and a Lisbon Project that would, in the words of the European Council (2000), ‘make Europe the most competitive and dynamic knowledge-based economy in the world’. Many believed that the euro would soon challenge the status of the dollar as principal international reserve currency. ¹