Wolfgang Munchau looks ahead to the evolution of the euro crisis in 2014. In his view, the policy debate is over. There will be no debt mutualization and no common backstop for failing banks. All adjustment will be made through austerity and "internal devaluation" (read enforced wage cuts). The European parliament elections in the spring will reveal just how terrible the political backlash against this harsh set of policy choices will be. Euroskeptic parties could capture a third or more of the seats. Worse, their growing influence in many countries is beginning to erode support for the EU in center-right parties. Couple this with the rising xenophobia and racism evident across Europe and likely to be exacerbated by an influx of immigrants from Romania and Bulgaria, no longer restricted from entry into countries to the west, and the potential for all sorts of ugly politics is clear.
Are there any bright spots on the horizon? Economies in several countries seem to be doing somewhat better than in recent years. France, unfortunately, is not one of them.