EUROPE FACES ECONOMIC QUAGMIRE OF FISCAL COLLAPSE IN 2010

“2010 debt crisis looming over eurozone
Sun, 03 Jan 2010 13:45:02 GMT
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A handicapped woman is seen begging for money in Berlin, Germany, in this August 11, 2009 file photo, amid rising unemployment rates in Europe due to the global financial crisis.
The European Commission has expressed alarm over the eurozone’s mounting debt crisis, seeing it as a threat to efforts aimed at pulling the zone out of its first recession.

European officials borrowed heavily in the face of growing economic shortfall and the commission predicts that the average eurozone public debt could reach 84 percent of gross domestic product by 2010.

The body warns that the debt levels, figures far above a ceiling set by European Union’s Stability and Growth Pact, will make public finances unsustainable in half of the 16 countries that share the single European currency.

It also noted that higher public debt levels, which show an average 18 percent increase from 2007, are born out of soaring budget deficits, low growth and banking sector support.

Eurozone states poured billions of euros on fiscal-stimulus measures and bank bailouts to weather the financial downturn. As a result, some of the zone’s most strong economies are facing high public debt levels.

Europe’s largest economy, Germany, forecasts public debt at around 78 percent of GDP this year, while Greece is bracing for a shortfall of 120 percent.

In France, the second largest economy in the zone, public debt jumped to a record 75.8 percent in the third quarter of 2009.
ZHD/MD”

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