Taking it all together is this a cyclical upswing or a structural recovery? So far it’s entirely cyclical. In my view, the single most important issue for European governments, ministers and leaders is how to make it structural. The recovery so far has been mainly driven by monetary policy and low commodity prices.
Our models show that around half of the recovery since the crisis can be attributed to monetary policy. If that remains cyclical we’ll be in big trouble because the economy will not generate the level of growth that will be enough to solve the structural issues of Europe.