August 17, 2014 10:39 PM

Their View | Europe facing slump

Remember how Europe had defied all the doomsayers and staved off both the collapse of its single currency and a wider political crack-up? Well, it is becoming increasingly clear that stop-gap measures enacted by the European Central Bank in 2012, with the support of German Chancellor Angela Merkel, succeeded in buying time and not much else. It’s true that the continent’s most heavily indebted governments — Spain, Italy, Portugal, Greece and Ireland — can still fund themselves, thanks to implicit ECB backing. But none of them has managed to rekindle much growth, and even Germany’s economy went into reverse during the second quarter of 2014. Increasingly, the talk is of deflationary risks and long-term stagnation like that which has afflicted Japan for the past quarter-century.

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