The economic and social problems of the European Union (EU) have not been fully resolved since the euro zone crisis, which began after the Global Financial Crisis (GFC) in 2008. The euro zone comprises 18 of the 28 members of the EU, all of whom have the euro as a common currency. These countries continue to be in turmoil. Though the intensity of the crisis has weakened, there still remain serious problems of deflation and unemployment. While Germany has experienced continuous growth, France has had slow and near-stagnant growth in the first quarter of 2014 and many of the southern members of the EU continue to have very low growth and high sovereign debt.

This issue brief walks the reader through the genesis of the crisis, the reforms and the bailout packages implemented; discusses the adverse consequences of austerity and proposes alternatives; and ends with implications for India.