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José Luis Álvarez, Director of department of Economics, University of Navarra
A domino effect that would be lethal
The consequences of a lack of agreement are unpredictable. We can make an exercise in politics or Economics fiction. The markets would interpret failure as a sign that there is no willingness in the Union to take decisions for cohesion. In other words, the message would be interpreted in terms of political and institutional weakness. It would arouse strong mistrust about the economic future of the Union and the ability of countries to steer their accounts along the path of sustainability. The response would be an attack on the sovereign debt of nations whose position is perceived as vulnerable, in a lethal domino effect for the euro zone.