What are the implications of the continuing economic crisis in Greece, Ireland and Italy for the future of the Euro and the European Union?
“What are the implications of the continuing economic crisis in Greece, Ireland and Italy for the future of the Euro and the European Union?”
Introduction
The prevailing consequence of perhaps the worst recession endured globally for the European Union and its single currency, introduced a mere decade earlier, is the uncertain outlook which it now faces. The seventeen countries that employ the euro, collectively known as the Eurozone, have been facing a major debt crisis since early 2010. Unsustainable government debt has been accumulated by certain Eurozone countries, and since then Greece, Ireland, Portugal and Spain have all turned to other EU countries and the International Monetary Fund (IMF) for hefty bailout packages. The crisis, which now threatens Italy, could mean that further, larger bailout packages may be required.
There are several implications of the continuing economic crisis in the peripheral countries, perhaps the main is that certain countries would be forced to withdraw from the Eurozone. Numerous other implications of political, social and economical nature ought to be evaluated using relevant cases of the peripheral countries. This essay will attempt to assess some of these implications referring primarily to Greece, Ireland and Italy, with brief allusions to Portugal and Spain, with use of contrast to reflect on the future outlook of the Eurozone.
In the early 2000’s the Euro was a strong and stable currency. This was manifested in the development of wide and deep corporate bond markets, an increase in the use of the euro as a reserve currency by central banks and sovereign debt levels did not differ much across the member states (Allen & Ngai, p.1, 2012). Following the global recession the Eurozone found itself in a sovereign debt crisis and was faced with the difficult decision of whether to allow member states default on their debt. In 2010 the international financial markets expressed serious
Introduction
The prevailing consequence of perhaps the worst recession endured globally for the European Union and its single currency, introduced a mere decade earlier, is the uncertain outlook which it now faces. The seventeen countries that employ the euro, collectively known as the Eurozone, have been facing a major debt crisis since early 2010. Unsustainable government debt has been accumulated by certain Eurozone countries, and since then Greece, Ireland, Portugal and Spain have all turned to other EU countries and the International Monetary Fund (IMF) for hefty bailout packages. The crisis, which now threatens Italy, could mean that further, larger bailout packages may be required.
There are several implications of the continuing economic crisis in the peripheral countries, perhaps the main is that certain countries would be forced to withdraw from the Eurozone. Numerous other implications of political, social and economical nature ought to be evaluated using relevant cases of the peripheral countries. This essay will attempt to assess some of these implications referring primarily to Greece, Ireland and Italy, with brief allusions to Portugal and Spain, with use of contrast to reflect on the future outlook of the Eurozone.
In the early 2000’s the Euro was a strong and stable currency. This was manifested in the development of wide and deep corporate bond markets, an increase in the use of the euro as a reserve currency by central banks and sovereign debt levels did not differ much across the member states (Allen & Ngai, p.1, 2012). Following the global recession the Eurozone found itself in a sovereign debt crisis and was faced with the difficult decision of whether to allow member states default on their debt. In 2010 the international financial markets expressed serious
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