A “euro hold up”?
The benefits of a stable and common currency do not materialize when fiscal policies are unsustainable.
But it also shows that tax innovations to pay for wars are compatible with deficient tax administration in peacetime, which in turn undermines the social legitimacy of taxes designed to pay for other types of public expenditure.
By, itself, the euro cannot change the fiscal constitution of Portugal, or of any of the other eurozone countries.
Hence reforms will continue to stall. This is the “euro hold up”, a reality consistent with Portugal’s fiscal constitution.