Euro-area macroeconomic policy positions after the Greek crisis.
French President Francois Hollande has called for a euro-area government, budget and parliament, while Italian Prime Minister Matteo Renzi has announced plans for three years of tax cuts that would threaten Italy's euro-area deficit reduction targets. After displaying rare and effective unity during this month's euro-area negotiations with Greece, the French and Italian governments have drawn lessons from the Greek crisis that reinforce longstanding policy preferences. The French and Italian positions make a potent intellectual combination. If they gained traction, they could change the terms of the European policy debate. However, the lessons France and Italy have drawn from Greece will exacerbate differences with Germany.
Among euro-area states, Spain could find it hardest to resist the French and Italian arguments.
Any renewed sense that France and Italy lack euro-area influence could bolster these states' domestic eurosceptics.
Germany faces rising international criticism for what is increasingly seen as its damaging policy obstinacy.
