The ongoing crisis in Greece has put a spotlight on fissures in the unified European Union economy, but the euro has always been a divisive idea. In 1997, two years before the currency was introduced, Swiss economist Manfred Gärtner looked at just how conflicted Europe was about the notion of a single currency for the continent.
Looking at public opinion surveys done in 1995 in the 15 countries that made up the EU at that time, Gärtner found support for the euro ranged from 30 percent in Denmark to 76 percent in Italy. In fact, Denmark still hasn’t adopted the euro, but several countries that did—Austria, Finland, Germany—were nearly as hostile to the idea. (Great Britain and Sweden also fell into the “opposed” camp, and both have opted against using the euro.)
The Italian view was shared by a larger group of countries: Belgium, France, Greece, Ireland, Luxemburg, the Netherlands, Portugal, and Spain. Not surprisingly, these are all countries that use the currency today.
What explains the divergent opinions? Gärtner crunched the numbers and found that the two biggest predictors of public support for the euro are past inflation of their own currencies and public debt in their countries. That is, loose national monetary and fiscal policies lead to the popular desire to use the new currency. (The length of time a country had spent in the European Monetary System, which partially linked various currencies, was also a factor, but it didn’t explain as much as the other two.)
To Gärtner, what all this suggests—at least at first blush—is that the populations of each country are rationally looking out for their own best interests. The idea is that a common currency would introduce discipline into countries that have racked up too much debt or let inflation rise too high.
Upon further analysis, though, Gärtner finds that this line of reasoning only works for the countries that favor the euro. Within the bloc that opposes it, there’s no stable connection between public opinion and economic policy.
In any case, in its actual implementation, the benefits of the euro have not necessarily fallen in the way the Europeans polled in 1995 would have predicted. Analyses in recent years have found that Germany has done remarkably well, while Greece and other countries where support was high have faced high employment and crippling austerity measures.