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THE INTERNATIONAL MONETARY Fund (IMF) has issued a warning that Eurozone leaders meeting in Brussels tomorrow must reach a deal to end the region’s sovereign debt problems.
The IMF warned that the intensification of the crisis which has already forced Eurozone members Greece, Ireland and Portugal to accept an international bailout could have “major global consequences”.
Greece is likely to need a second bailout whilst there are fears over the debt problems in Spain and Italy. Ireland’s adherence to its bailout programme was given approval by the troika of the EU, IMF, and European Central Bank last week.
But in a report examining the possible “spillover” impact of more uncertainty in the euro, the IMF warned of the effects from the crisis spreading through the entire region, warning that it could cut growth by 2.5 per cent while projected global growth would fall by around 1 per cent over the rest of this year and next.
Despite the warning, the IMF described the eurozone recovery as “broadly sound” although noted that growth “remains uneven and moderate”.
EU officials will meet in Belgium tomorrow to try and flesh out a package of measures for a second bailout of Greece with worries that the debt crisis there could spread to Spain and Italy which last week passed unprecedented austerity measures in a bid to stave off economic crisis.
The German chancellor Angela Merkel has previously warned she may not attend the summit unless a deal is in place. She has insisted that private investors must share the burden of alleviating Greece’s financial problems. More recently she has warned that the summit is unlikely to herald a big fix that could solve the crisis.
However the Telegraph reports that diplomats in Brussels are warning that unless there is a deal “more or less” sealed “bedlam” could ensue in the markets on Thursday.
Bloomberg adds that Merkel will meet with French president Nicolas Sarkozy in Berlin today to attempt to find common ground on which to address the crisis.
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Abolish the Euro
Explain what would be of benefit if we were to do that?
Control of our own currency.
If the bonds were as high for france and germany as they are for ireland and greece you could bet ur euro the this mess would be sorted by now.But because its only small countrys like ours who are paying over the odds germany and france pretty much saying tough luck.If germany had its wish,it would control the whole of europe by bringing in a single tax system for the whole of the EU.Its only when two of the big boys of this club(Italy and Spain)get into trouble with the bond market that europe wakes up.Is it too late to save the euro?Time will tell.
I absolutely do not think that is what’s happening. Germany to look after themselves as well. If we were in their position, I’m sure we would be insisting on some of the burden being delegated to other parties etc. also. Instead of trying to create issues with Germany, we should be grateful for the bailout they (basically) soley provided us with.
Whilst she was the former Minister of Finance in France prior to her new post, could she not have said the same thing?
I do not understand her logic now that the Euro crisis has deepened, this could have been prevented if she spoke up before her IMF role, I now question her suitability for her new post
Your right.She is been told to say this by orther members of the imf.She would not say anything as french goverment minster because she would have been but the euro in deeper trouble before now.
IMF, France and Germany all part of the problem. When they cant make up their mains on what direction they want the E.U to go.
Germany will never let that happen
It seems that several banks in Greece, Ireland, Portugal, and Spain may already be insolvent. Austerity measures and budget cutting alone would hurt the broad based population–the middle and lower income workers in particular–without solving the underlying problems. May be some creditors should be ready to accept losses and provide the sovereigns with time to restore confidence in their financial systems. In the meantime, the Eurozone must go ahead in restructuring the debts of these countries.
Its only fair that the french and german taxpayers help to pay back the debts for the money that their banks lent – Sarkosy seems to be willing and pushing for a solution, Merkel is being stubborn to appease her own electorate. It was joining the euro that enabled the low interest rates that have caused the debt problems facing Greece, Ireland, Italy, Spain etc, so all of the taxpayers of Europe should share the pain of repaying the debt. How will German exports fare if the Euro collapses anyway.
have your say