The European economy has exhibited dire trends, explained Carnegie's Uri Dadush on CRI English. Greece continues to cut state positions, Spain has observed its highest unemployment rate ever at 27 percent, the UK's economic growth remains sluggish, and Italy is only now forming a new government. Dadush argued that more can be done by Germany and the center of Europe to reflate the economy and allow wages to rise. Moreover, he stated that the European Central Bank could probably be more aggressive with its quantitative easing. Dadush stressed that it is difficult for countries like Italy and Spain to implement any policies other than austerity, as markets will not lend them the money and governments are unable to finance their budget deficits. Spain and Italy need to regain the confidences in the markets. Only once markets improve significantly and confidence returns, Dadush stated, can they practice more expansionary policies. If growth does not return in the next two years, the political situation will become more difficult, and all bets will be off.
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