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14 Mar 2013
European leaders loosen noose on embattled Southern European countries
European leaders are embarking off a previous hardline stance, in essence loosening the economic shackles once demanded by Germany as the recession lingers and unemployment mounts across southern Europe. In an effort to relinquish the debt crisis – without a doubt the euro area’s biggest headache – European leaders will look to find common ground to foster a joint resolution that will improve the plights of several indebted countries and their constituent populations.
With the two-day Brussels summit starting today, leaders will endorse plans for “structural” assessments of national budgets, according to a draft statement, using code for granting countries such as France, Spain and Portugal extra time to bring down deficits.
Substantial progress has been made toward structurally balancing and reconciling budgets and that progress must continue in order to lift several countries out of the doldrums. The focus is on “growth- friendly fiscal consolidation. European politicians are masking the paradigm shift in language designed to alleviate investors who have driven borrowing costs lower since mid-2012 that balanced budgets remain the goal.
However, the relative tranquility was barely disturbed by last month’s inconclusive election in Italy, which indeed threatened to unravel an already fragile situation. Another milestone in coming out of the debt crisis was also reached yesterday, when Ireland sold 10-year bonds for the first time since its bailout in 2010, leading to optimistic results and additional prospects of auctions.
As a result, officials in Brussels, Berlin, Paris and Madrid said yesterday that an aid package for the next problem country, Cyprus, doesn’t even need to be discussed at the summit. It will be dealt with tomorrow in earnest, at a separate meeting of euro-area finance ministers. The group of euro finance chiefs is considering a mix of options to reduce the amount of an aid package for Cyprus to near €10 billion, noted Dutch Finance Minister Jeroen Dijsselbloem, who leads the so-called eurogroup. Dijsselbloem said no potential instrument is being excluded and considering privatizing state- owned companies could be “legitimate.”
The 17-nation economy will follow last year’s -0.6% contraction by shrinking -0.3% in 2013, the first back-to-back decline since the euro’s inception in 1999, the European Commission forecasts. It sees bloc-wide unemployment at 12.2% in 2013, with joblessness as high as 27% in Greece and 26.9% in Spain.
With the two-day Brussels summit starting today, leaders will endorse plans for “structural” assessments of national budgets, according to a draft statement, using code for granting countries such as France, Spain and Portugal extra time to bring down deficits.
Substantial progress has been made toward structurally balancing and reconciling budgets and that progress must continue in order to lift several countries out of the doldrums. The focus is on “growth- friendly fiscal consolidation. European politicians are masking the paradigm shift in language designed to alleviate investors who have driven borrowing costs lower since mid-2012 that balanced budgets remain the goal.
However, the relative tranquility was barely disturbed by last month’s inconclusive election in Italy, which indeed threatened to unravel an already fragile situation. Another milestone in coming out of the debt crisis was also reached yesterday, when Ireland sold 10-year bonds for the first time since its bailout in 2010, leading to optimistic results and additional prospects of auctions.
As a result, officials in Brussels, Berlin, Paris and Madrid said yesterday that an aid package for the next problem country, Cyprus, doesn’t even need to be discussed at the summit. It will be dealt with tomorrow in earnest, at a separate meeting of euro-area finance ministers. The group of euro finance chiefs is considering a mix of options to reduce the amount of an aid package for Cyprus to near €10 billion, noted Dutch Finance Minister Jeroen Dijsselbloem, who leads the so-called eurogroup. Dijsselbloem said no potential instrument is being excluded and considering privatizing state- owned companies could be “legitimate.”
The 17-nation economy will follow last year’s -0.6% contraction by shrinking -0.3% in 2013, the first back-to-back decline since the euro’s inception in 1999, the European Commission forecasts. It sees bloc-wide unemployment at 12.2% in 2013, with joblessness as high as 27% in Greece and 26.9% in Spain.