The euro rescue fund @5: Taking stock

On June 7, 2015, the euro rescue fund will celebrate its 5th anniversary. Thus, it is time to take stock regarding the success of the reform strategy, the institutional relevance of the ESM, and current political challenges to the conditionality principle which is an essential pillar of the reformed EMU institutional architecture. First, the rescue and reform strategy of the euro area is on the right track in Ireland, Spain and Portugal. While challenges remain particularly regarding public and private debt levels, all three countries successfully returned to the financial market after implementing a multitude of reforms. The Cologne Institute for Economic Research (IW Köln) analysed the economic progress made since the beginning of the crisis - with the following results: * Ireland performs best, closely followed by Spain and with Portugal coming third. * Economic growth has returned and is particularly buoyant in Ireland and Spain. * Remarkably, domestic demand is also growing relatively rapidly despite the fact that private debt levels are still elevated and deleveraging is ongoing. * Unemployment remains high (particularly in Spain), but is decreasing at a considerable pace. * All three countries have turned their current account from deeply negative into positive digits. This success has been based on a surprisingly strong export performance. [...]