Is it time for a divorce?

As Europe celebrates the tenth anniversary of the single monetary union, the question of the euro's ability to survive another decade has never been more pertinent or more divisive if a discussion at the Chamber of Commerce is anything to go by.

The event on Thursday night saw seven financial and European experts offer very differing views on the causes of the crisis which the euro now faces, as well as possible solutions.

From quitting the euro altogether to capping Luxembourg's wage growth, panellists drew very different pictures for the 200 or so people who gathered for the English-language event.

The wage question

Chief Economist and Head of the International Department at the Luxembourg Chamber of Commerce Carlo Thelen set his sights on ensuring that wages are set at a level proportionate to production rates, among other factors, as a possible lifebelt for Luxembourg. “Luxembourg might be small and beautiful but it is not an island,” the expert explained, adding that as a major financial hub, the Grand Duchy was very exposed to the crisis.

The wage argument was rebuffed by Chambre des Salariés de Luxembourg Executive Advisor Marco Wagener, who pointed out that Luxembourg's high wages did not cause the deficits, which he said are responsible for the crisis. “But, now wages have become the main instrument to clean up a market that has got out of control,” he said.

Far from solving the problem, Mr Wagener suggests that lowering wages will lock the economy in a downward spiral, “increasing big deficits and debt.” He added that Europe should take control of issuing credit ratings for its member states.

The wave is yet to hit

Whatever the wage situation, Luxembourg remains in the privileged position of not having received the full force of the crisis wave, according to Luxemburger Wort Financial Editor Pierre Leyers.

“I've a feeling that the real crisis hasn't yet arrived in our country. There are no strikes, hardly any austerity measures. On the surface it's business as usual,” he said. But, in order to influence outcomes when the wave does hit, the Grand Duchy must first regain its voice. Mr Leyers suggested that whatever solution is proposed to the Euro crisis, it will be the larger member states which decide.

The divorce

One extreme solution, which it appears member states are not yet prepared to consider is a dismantling of the eurozone. Mr Leyers opposed this move, saying: “it will be a catastrophe for the Grand Duchy because it's too small to have its own currency.”

Sacred Heart University Academic Director Alfred Steinherr, however, offered a different view. “I'm fully aware a divorce is costly and sometimes frightfully so. Except when you're young and you have 50 years ahead of you it maybe worthwhile.”

The event was organised by Sacred Heart University Luxembourg in partnership with Amcham. The panellists included Director of the Luxembourg Institute for European and International Studies Dr Armand Clesse, European Commission Directorate General for Economic and Financial Affairs Dr Christian Ghymers, Luxemburger Wort Financial Editor Pierre Leyers, Central Bank of Luxembourg Head of Monetary Economics and Statistics Dr Jean-Pierre Schoder, Sacred Heart University Academic Director Alfred Steinherr, Chamber of Commerce Chief Economist and Head of the International Department Carlo Thelen and Chambre des Salariés Executive Advisor Marco Wagener.