Europe
is fighting losing battles on two fronts. The debt crisis which began
in Greece almost three years ago has spread to other countries. The
recovery from the global financial crisis is ending, and the region will
be in recession during the rest of the year. To combat the debt crisis,
Greece, Ireland and Portugal have received bailout funds from the EU,
European Central Bank and the International Monetary Fund (the
“troika”), but are required to reduce borrowing through cuts in spending
and higher taxes. To offset the recessionary impact of the fiscal
tightening, the ECB has repeatedly eased monetary policy to encourage
lending to the private sector.
Neither measure has worked as intended. The eurozone’s latest unemployment figure of 11.1 per cent in May is the highest in the euro era. Spain, the country recording the region’s highest unemployment rate of 24.6 per cent, announced a €65bn fiscal tightening programme this month. The new austerity measures will result in a deeper recession and even higher unemployment.
Read more: http://www.ft.com/intl/cms/s/0/359a5950-d253-11e1-abe7-00144feabdc0.html#axzz21Zt7sSQb
Neither measure has worked as intended. The eurozone’s latest unemployment figure of 11.1 per cent in May is the highest in the euro era. Spain, the country recording the region’s highest unemployment rate of 24.6 per cent, announced a €65bn fiscal tightening programme this month. The new austerity measures will result in a deeper recession and even higher unemployment.
Read more: http://www.ft.com/intl/cms/s/0/359a5950-d253-11e1-abe7-00144feabdc0.html#axzz21Zt7sSQb
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