Gordon Brown on the Eurozone’s “Wasted Decade”


The 2014 Global Financial Leadership Conference (GFLC) begins November 17 in Naples, Fla. Leading up to this year’s event, we’re featuring interviews with past featured speakers from the conference. Gordon Brown presented at GFLC in 2013.

During this fall’s Scottish independence referendum, there was perhaps no more vocal advocate for keeping Scotland in the United Kingdom than Gordon Brown, former Prime Minister and current Labour Party member of parliament. The distinctive traditions of the U.K. allow common social and economic rights, which makes a union that includes Scotland stronger, he argued.

It may have been Brown’s most public political stance since leaving office as Prime Minister in 2010. But as the leader of the U.K. during the global financial crisis that began in 2008, Brown has a unique perspective on what led to the Eurozone’s problems then, and what continues to keep the EU in a state of high unemployment and low growth. EU gross domestic product continues to hover near zero five years after the financial crisis began. Unemployment is currently at 11.5 percent, which Brown told us in an interview is one of the union’s biggest challenges.

“Nobody sees that number falling very quickly, so you’ve got a massive amount of unused capacity in the Eurozone as well as this negative growth, which really has been responsible for falling standards of living, rising youth unemployment in particular,” he says. “So we’ve got a major social problem as well as an economic problem as a result of this.”

As the low growth drags on, concerns have begun to surface about the long-term effects of a GDP rate that is setting up to be below 1 percent for five of the past seven years, says Brown.

“I think we’ve tended to forget that in the attempt to recover from a recession, we’ve left the Eurozone with basically what some people will call a wasted decade of low growth.”

Beyond growth and unemployment, the Euro is currently trading near 1.25 against the U.S. dollar, its lowest level in more than two years; and the The European Central Bank (ECB) has set interest rates at an all-time low of .o5 percent. The ECB will meet November Nov. 6 to decide where to position interest rates going forward.  With so much focus on the near-term, Brown says all moves toward strengthening the Eurozone should come with a long-term focus.

“I would be more interested in looking at what the long-term possibilities for an economy are at the moment,” he says. “Every European economy is under pressure to show that it has a long-term strategy for its future.”

Read More:

Who Will Take the Lead on Eurozone Growth?

Evan Peterson is director of corporate marketing at CME Group and managing editor of OpenMarkets.

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