This article describes the major issues in the eurozone. In order in to turn over government debts that are maturing in the periphery, these countries are increasing taxes and cutting government spending in order to convince investors of their intentions to be fiscally responsible. On the other hand, these austerity measures are slowing down economic growth, which will cause tax revenues to fall. A recession Europe is expected. That will only make economic recovery more difficult and it is likely to lead to more social unrest.
This article did not address problems in the banking sector, but recession and increased requirements for capital to asset ratios will tighten credit markets in Europe. Governments may also be required to assist troubled banks when their finances are strained.
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