The Euro Crisis should, in theory, be seeing an end in sight, with the second Greek loan finalised and the European Stability Mechanism (ESM) and the European Financial Stability Facility (EFSF) set up for completion in a few years. The fact, however is, that it still is. Even during the stalemate over the Greek debt situation, there were warnings that other European countries were also in the red.
For instance, Spain's economy is in a very grave situation with an expected contraction of 1% and an expected rise of unemployment rates to 25% by the end of the year. The regional government debts are not under control. While Spain's debt-to-GDP ratio is not too high at 90% many are still suffering with debts from the burst housing bubble and banks need more strengthening. The message from Madrid was that Spain could be tipped into a downward Greek-style spiral of debt if spending was cut too quickly.
Many of the EU leaders, except for Germany, were convinced that the restructuring of Greece's debts was the turning point of the crisis. All calculations of revival are at risk depending on the depth of the recession. The EU believes it will be "mild" and that it will be gone by the end of the year, but the figures tell a different story.
Greece's economy shrank by 7.5% last year and is still falling. Italy's economy is predicted to contract by 1.5% this year and as of January, industrial production has shrunk by 5%. Portugal's economy has shrunk by 1.6% last year.
The current biggest problem is the fourth largest economy in the Eurozone- Spain. The Spanish government have announced plans for cuts to the tune of 37bn (10bn to be saved per year in education and health and 27bn as part of the deficit reduction plans announced in March) in an attempt to close the 15bn gap to fulfil their deficit target of 1.5% in 2012.
The Spanish minister for the economy, Luis De Guindos has, over the past week stressed the country's commitment to reform in various interviews. With fears mounting that Spain may need a bailout loan, they are under pressure from the European Union to reign in public spending. In light of this De Guindos has stated that Spain may sell off public real estate. He also caused great chaos by suggesting that the rich be charged for public health services, where the sector is currently 15bn in debt. He stated however, that Spain wouldn't hike up the country's considerably low VAT, stating that a VAT hike like in 2010 wouldn't be very effective.
For instance, Spain's economy is in a very grave situation with an expected contraction of 1% and an expected rise of unemployment rates to 25% by the end of the year. The regional government debts are not under control. While Spain's debt-to-GDP ratio is not too high at 90% many are still suffering with debts from the burst housing bubble and banks need more strengthening. The message from Madrid was that Spain could be tipped into a downward Greek-style spiral of debt if spending was cut too quickly.
Many of the EU leaders, except for Germany, were convinced that the restructuring of Greece's debts was the turning point of the crisis. All calculations of revival are at risk depending on the depth of the recession. The EU believes it will be "mild" and that it will be gone by the end of the year, but the figures tell a different story.
Greece's economy shrank by 7.5% last year and is still falling. Italy's economy is predicted to contract by 1.5% this year and as of January, industrial production has shrunk by 5%. Portugal's economy has shrunk by 1.6% last year.
The current biggest problem is the fourth largest economy in the Eurozone- Spain. The Spanish government have announced plans for cuts to the tune of 37bn (10bn to be saved per year in education and health and 27bn as part of the deficit reduction plans announced in March) in an attempt to close the 15bn gap to fulfil their deficit target of 1.5% in 2012.
The Spanish minister for the economy, Luis De Guindos has, over the past week stressed the country's commitment to reform in various interviews. With fears mounting that Spain may need a bailout loan, they are under pressure from the European Union to reign in public spending. In light of this De Guindos has stated that Spain may sell off public real estate. He also caused great chaos by suggesting that the rich be charged for public health services, where the sector is currently 15bn in debt. He stated however, that Spain wouldn't hike up the country's considerably low VAT, stating that a VAT hike like in 2010 wouldn't be very effective.
About the Author:
Priyanka Zaveri is a freelance writer,online marketer writes for many online publications,as well as developing content and articles for a variety of well-established websites. Her latest project is writing informative articles on the subject of Debt Recovery and Debt Collection Company for the reputable online agency CBC International.
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