Just at the time when the possibility of a major Greek upheaval in the euro area has grown into a real threat, a referendum on whether the UK may leave the European Union has drawn closer following Prime Minister David Cameron’s election victory on 7 May. In both cases Angela Merkel, the German chancellor, will play a decisive role. She and her country will do a lot – but not everything – to keep both protagonists as members of a diverse European line-up. David Marsh analyses the opportunities for an Anglo-German alliance to rescue Europe from instability – and points to often unsuspected convergence between the UK and Germany that might prove crucial in a compromise on Britain’s EU membership. Thomas Kielinger and Denis MacShane, from different sides of the camp, warn against giving too much credence to established opinion. Kielinger doesn’t believe Brussels protestations that Britain’s EU reform requests go too far. MacShane is equally sceptical about the oft-viewed theory that UK voters would never opt to depart. From the advisory board, Antonio Armellini, Bob Bischof, Trevor Greetham, John Kornblum and Gerard Lyons give their views. Armellini spells out the brutal truth that a British exit from the EU would signify Scotland leaving Britain. England could soon start to feel lonesome.
Looking further afield, Meghnad Desai tells us to prepare for secular stagnation, Darrell Delamaide relates how the Fed is inching towards an interest rate rise, while Ousmène Mandeng underscores the importance of refashioning the currency weights inside the Special Drawing Right and introducing the renminbi.
Ryan Shea and Pasquale Urselli warn how the US and other leading countries should get ready for further unconventional measures, while Moorad Choudhry scans inconsistencies in the ECB’s monetary stance and warns against over-reliance on quantitative easing. Lorenzo Codogno, recently departed from the Rome Ministry of Finance, surveys some brighter spots for Italy. Francesco Franco focuses on Portugal’s problem of a large negative international investment position. Francesco Papadia answers key questions on the ECB’s QE.
In our emerging markets section, William Baunton and Bronwyn Curtis explore prospects for Asean countries in the light of possible problems from a rise in US interest rates and the Chinese economic slowdown. Gerard Lyons salutes the positive outlook for international co-operation from the establishment of the Asian Infrastructure Investment Bank. Juan Carlos Martinez Oliva from the Banca d’Italia says expanding the renminbi’s role will be internationally beneficial.
Michael Lafferty records the opportunities available from mobile financial services in Africa. Antonio Armellini praises Indian Prime Minister Narendra Modi’s first year in office. Jamie Bulgin and Pooma Kimis explore the outlook for the Brazilian real and the Indonesia rupiah. William Keegan reviews Meghnad Desai’s book Hubris, saying the chairman of the OMFIF advisory board has restored a sense of history to economics