A Dire Review
It has been two years since the €110 billion bailout given to Greece and there is no close end in sight for the crisis. Five days ago, unemployment in the euro zone reached a record high of 18.2 million following a continuous 16-month rise.
Parties advocating leaving the EU such as the UK Independence Party have seen jumps in the polls as well as extremist groups across the continent in reaction to harsh government austerity measures.
Austerity is rife across Europe, and has largely been considered at the very least to be stagnating the various economies.
At the time of the bailout German Finance Minister Wolfgang Schäuble called it Germany’s “mission to defend the stability of the euro zone in its entirety.” Christine Lagarde, head of the IMF, told right-wing French paper Figaro that the “cost of solutions increases as time passes, … The more Europeans act fast at the national level, the more the dynamic can change.”
Yesterday a spokesman for Merkel, Steffan Seibert, stated the need for “Greece to stablise itself within the eurozone.”
Germany is recovering well, and has the capital to prop up the euro zone. Merkel, who was a favourite of Kohl, is as such not unfamiliar with this process. For Kohl the Euro was not an economic ideal but a political one; much like the German deutschemark uniting the East and West the Euro was intended to be a symbol of European unification and reconciliation following the Cold, Second, and First World wars.
China too, will have a stake in propping up falling countries during the crisis as shrinking in the Chinese economy can be directly related to loss of markets. Whilst Russia, which is one of the more fiscally stable countries within Europe looks East with diverted attention China will be (and already has been) keeping an interest in European recovery.
Greece is unlikely to leave the Euro, as only one political party there supports it. It is no more likely for any other countries too. However, it is extremely likely that even if there isn’t a big default coming and if the debt is stabilised that austerity measures will continue for the foreseeable future at least until the problem is stabilised enough for spending to come through.
The current outlook is negative, but the future outlook is positive. News here and the graph shown indicate that the debt will indeed level out; countries such as Iceland and France have shown that recovery isn’t completely impossible. Whilst the IMF does indeed expect the euro zone to shrink this year, it is only by 0.3 percent which is to be followed by a nearly 1% of positive growth.
- IMF pressuring eurozone to ease Greek bailout terms, reports WSJ (ekathimerini.com)
- Euro Zone Crises: A Danger For The Global Economy?! (ireport.cnn.com)
- How does the eurozone crisis affect UK markets? (businesshelp.lloydstsbbusiness.com)
- Nine in 10 Greeks believe latest cuts unfair, poll indicates (ekathimerini.com)
- Debt Crisis: Eurozone considering investor insurance scheme to bailout Spain (independent.ie)
- Panic in the Eurozone? (presseurop)