Dr James Nixon is chief European economist at Oxford Economics, says Yes
There’s no doubt that Europe’s problems stem from a massive failure of macroeconomic policy. The financial crisis of 2008 laid bare the single currency’s fundamental flaws, and ever since Europe has been fighting to put its house in order. The failure was to try to do everything at once, be it reform the banks, cut back on over-spending or free up the labour market. But these adjustments are now largely behind us. This process of domestic healing has left Europe’s banks well capitalised and much of the corporate sector lean and mean. Moreover, having resisted QE through the crisis years, the European Central Bank has finally decided to light the blue touch paper – just when the economy is about to take off. Ebullient consumers are seeing their spending power further boosted by low oil prices. The resulting strength of domestic demand is set to finally give businesses the confidence to invest, which will boost employment and generate a rigorous recovery.
Kevin Gardiner is global investment strategist at Rothschild Wealth Management, says No
For one thing, Greece is not quite “off the table”. For another, Greece has not been the constraint. Releasing a brake that isn’t working doesn’t make the car go faster. The Eurozone is not noted for its dynamism. There are some exceptions – most visibly Ireland – but trend growth lags that of the US, or even the UK. There are many reasons for this, including the rigid French labour market, but the key point is that economic “booms” are few and far between, and it will take a bit more than the European Central Bank’s QE and a cheaper euro to deliver one now. However, we advise against trying to time markets in any case – and you don’t need a domestic boom to see long-term value in European stock markets currently. Europe has many world-class companies, not least because they’ve had to go global to find faster growth.