Eurozone’s Inaction an Anchor Around the World’s Neck

The eurozone crisis continues to take a hard toll on the global economy, slowing growth in the United States, China and Japan. While European stocks rose today on the better than expected GDP growth in Germany and France, the E.U. as a whole kept with predictions and contracted 0.2%.

There are growing concerns that the current make-up of the single-currency system in Europe may be coming to end—and with good reason. European leaders continue to struggle with fiscal and economic difficulties within their countries and the burden of supporting periphery states. Growth may be up in the Netherlands, Germany and Austria (a scant 0.2 % for each), but it is drastically down in countries such as Finland, which posted a 0.7% decline in output. The third quarter should prove to be testing for the ECB, as Spain continues to rely on the central bank’s funds, and other periphery countries will begin to demand financial solutions. It has been suggested that a round of quantitative easing be put into action, but it is unlikely that the ECB would implement such a tool so soon.

 

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