![]() ![]() This is significantly higher than the 2010 crisis of the single European currency. By the end of last year, Greece’s debt amounted to 171.3 percent of GDP, Italy – 144.4, Portugal – 113.9, Spain – 113.2, France – 111.6 percent. As a result, the debt of a number of member countries has spiked to dangerous new highs. Since then, Christine Lagarde’s agency has been grappling with an almost impossible dilemma: to curb rising prices and, at the same time, avert debt and banking crises.ĭuring the time of the COVID-19 pandemic, the EU spent more than two trillion dollars on economic support measures. In fact, the ECB let the inflation out of hand. Secondly, last fall, the ECB was forced to admit that its estimates of inflation dynamics had been seriously flawed. First, because, in the long haul, a monetary union is unlikely to rely indefinitely on central bank coverage of new debt. However, despite the ECB’s strong promise, it was met with a restrained reaction on the part of many investors and experts. In June 2022, the ECB, just like it had done a decade before at the peak of the previous Eurozone crisis, promised to “do whatever is necessary” to prevent weak countries from sliding into default. Even France, the EU’s second-largest economy, is forced to offer investors yields of half a percent more. That said, each of these countries is still forced to pay over one percent more than Germany in order to take out a ten-year loan. ![]() With foreign holders dumping the bonds of Greece, Italy, Spain and Portugal, the threat of a new Eurozone debt crisis may be closer than it seems.Ĭompared with the cost of borrowing in the Eurozone’s powerhouse, Germany, in Greece, Italy, Spain and Portugal it has slightly decreased from the peak values of the early summer of 2022. Even though the decline in terms of economic dynamics remains small – just about 0.1 percent of GDP, realistically minded experts believe this is the beginning of hard times waiting ahead. The recession in the Eurozone continues for the second quarter in a row now. ![]()
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