EU Plan Must Be Backed Up by Budget Cuts

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In The Media

EU Plan Must Be Backed Up by Budget Cuts

While the recently announced Eurozone support package suggests the possibility of a new era of fiscal coordination across Europe, it will only succeed if the countries in need of aid undertake far-reaching policy changes.

By Uri Dadush

Published on May 12, 2010

Source: Bloomberg

The recently announced nearly $1 trillion package in support of weak Euro area members is “tremendously important,” said Uri Dadush. It marks “the end of ‘every man for himself’ in the monetary union” and suggests more fiscal coordination across the countries is likely. It also places other vulnerable countries under “very tough, IMF driven conditionality” if they run into trouble.

However, Dadush added, the package has not completely calmed markets, which fear that “these are unsound governments trying to support unsound governments.” In the end, the package will only work if Spain, Portugal, Italy, and Ireland—as well as Greece—undertake very far-reaching changes.

About the Author

Uri Dadush

Former Senior Associate, International Economics Program

Dadush was a senior associate at the Carnegie Endowment for International Peace. He focuses on trends in the global economy and is currently tracking developments in the eurozone crisis.

Recent Work

Commentary
The Labors of Tsipras
- Uri Dadush
In The Media
Greece, Complacency, and the Euro
- Uri Dadush

Economy Western Europe United Kingdom France Germany North America

Carnegie does not take institutional positions on public policy issues; the views represented herein are those of the author(s) and do not necessarily reflect the views of Carnegie, its staff, or its trustees.

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