Europe's Growing Crisis

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In The Media

Europe's Growing Crisis

Recent cuts to the credit ratings of Spain and Portugal indicate that the crisis in Greece is spreading across Europe. Given the financial market pressure on Greece, debt restructuring appears inevitable, but it remains to be seen when it will occur.

By Uri Dadush

Published on Apr 29, 2010

Source: The Diane Rehm Show

Standard & Poor’s recently cut the credit rating of Greece, as well as Spain and Portugal, indicating that the crisis in Greece is spreading across Europe. In order to avert the crisis, Greece will need to engineer an “enormous fiscal cut” in order to stabilize their rising government debt, said Uri Dadush. However, it will be “very difficult for the Greeks to dig themselves out of this situation while maintaining their projected debt payments.”

Given the financial market pressure on Greece, “inevitably, some kind of restructuring of the debt has to happen” but it remains to be seen when this occurs. It can happen now, under tremendous market pressure and when banks will be extremely fragile, or, if the EU and IMF provide sufficient support, it can happen in the coming years once the world economy has recovered.

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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