Framing the Crisis, Defining the Problems: Decoding the Euro Area Crisis

Abstract From autumn 2009 onwards, the euro area has experienced a sustained economic crisis that has mutated into a social and political crisis. In ‘hard times’, existing paradigms come under strain and a high level of contestation concerning policy prescriptions is to be expected. Crises tend to act as focal points for institutional, policy and political change that leave significant legacies. European Union and euro area actors had to engage in a process of collectively decoding the crisis and the problems it engendered given the strong and sustained signals emanating from the financial markets, rating agencies and Europe's international partners. The crisis opened up a deep cleavage within the euro area between creditor and debtor states or Europe's core and periphery. The objective of this paper is to analyse how the crisis was decoded as this had a major impact on the choice of policy instruments and policy responses.