Europe may be poised for a golden decade of economic expansion

This would then translate into a longer runway for the Eurozone economy to continue to expand without the need for the European Central Bank to apply the brakes with tighter policy.

The old adage “expansions do not die of old age” remains true. The number one cause of death for economic expansions is an inappropriate policy response. 

But an ultra-dovish ECB, and the end of the fiscal adjustment process across the Eurozone, means that there is only a very slim chance of either monetary or fiscal policy derailing the recovery.

As a result of the double dip recession in 2010-12, the Eurozone region is now lagging the US economic cycle by several years, but the performance during the current expansion is comparable to the first four years of the cycle that started in the US in 2009. 

While the comparison is far from perfect, the US economy – now in its ninth year of expansion – suggests the Eurozone could enjoy a similar period of growth. 

Unexpected shocks do happen and could, of course, derail the recovery. Big geopolitical events or protectionist shocks to world trade are the main external dangers, whereas political risk remains the major domestic threat. 

But the chances that the Eurozone is embarked on a “Euroboom” with legs look to be the best for years if these risks do fail to materialise.

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