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Europe’s Weak Spots Ready to Become New Crises

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Europe’s Weak Spots Ready to Become New Crises

GIS,

5 min read
5 take-aways
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What's inside?

The European Union may face financial contagion unless it addresses its pressing problems.

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Editorial Rating

8

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Recommendation

The European Union is facing considerable weaknesses in banking, public debt and growth that place the Continent at risk for further crises. Policy makers are looking to quantitative easing and zero-bound or even negative interest rate policies for a solution, but according to economics professor Enrico Colombatto, their remedies have been unable to spur growth. Executives and investors with an interest in one of the world’s largest economies will find immense value in this brief but compelling report, which getAbstract highly recommends.

Summary

Since the 2008 financial crisis, the European Union and the euro-zone countries have contended with slow growth, a fragile banking system and high debt-to-GDP ratios. EU leaders believed that 2% to 3% annual growth would stabilize the region, reduce burgeoning debt levels and strengthen banks. But 2015 GDP growth clocked in at 1.6% in the euro zone – and at 1.9% in the EU, due to better performance in the United Kingdom and Poland. Germany, France and Italy – the three largest euro economies – managed to expand at only 1.7%, 1.1% and 0.9%, respectively. Forecasts predict 2016 GDP growth of 1.8%, “thanks to low commodity prices and a weak...

About the Author

Enrico Colombatto is a professor of economics at the University of Turin, Italy.

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