Europe's currency union — not so long ago on its sickbed — has started the year in rude health. The winning streak looks set to continue since economic confidence in the euro area is at its highest for almost two decades, but it will have an unwelcome side effect. The more the euro zone economy thrives, the less pressure there will be on European politicians to take steps to prevent future crises.
The resurgence is welcome because it bolsters public support for the single currency. However, the boom fostered by the European Central Bank's (ECB) easy money policies will tempt politicians to shun the hard decisions involved in deeper integration. Further reforms remain vital because the monetary union of 19 states lacks the same fiscal and political foundations that underpin a national currency. Instead there is a divide between northern economies that can cope with the rigor of a common currency and those in southern Europe that have found it hard going. The ECB has rescued the weaklings with its ultra-loose monetary policy, but that offers no more than temporary respite.
A rare opportunity for pressing ahead with reforms appeared to open up last year when Emmanuel Macron prevailed over populist euro-skeptic forces in France. The new French president made clear he wanted to rev up the Franco-German engine for closer European integration, which had lapsed when the euro debt crisis was gravest between 2010 and 2012 and Germany took the lead owing to its stronger economy and sounder public finances. Specifically, Macron advocates a euro zone budget and finance minister, in effect the rudiments of a fiscal union to support the monetary union.