Resolving the crisis in the euro will require progress on many fronts. Certainly, stronger institutions and policy frameworks need to be developed, particularly for fiscal policies, and policies towards the financial sector. In both cases, there is an important question of how to balance greater risk-sharing with greater centralisation of controls. But arguably the acid test for the euro area to come through the crisis will be seen in the degree of macroeconomic adjustment that is possible in the countries who have lost the confidence of capital markets, or who are struggling to retain it. There are three key, inter-related aspects to this adjustment: fiscal, external and the real exchange rate. In this presentation, I will review the evidence of macroeconomic adjustment (assessed against some criteria and models); comment on the outlook for ongoing adjustment; and say a little about how this looks from a UK perspective.