The European Union has reached a critical juncture in dealing with the fallout from the 2008 financial meltdown that started in the USA and spread to engulf banks and the financial markets of Europe. The ensuing recession or stagnation in many member countries was compounded by austerity...

This paper develops a 'structural political economy' approach to two fundamental tensions that emerged as the eurozone crisis unfolded: real exchange rate misalignments and external debt build-up. The approach builds on a classical legacy going back to Francois Quesnay, who conceptualised...