CRISISBOOM

Yevgeny Kryshkin

The European Union is facing a new phase of the economic crisis. This depressing forecast was made by a report on the World Economic Situation and Prospects-2011 presented by the United Nations Conference on Trade and Development. Our commentary is by Yevgeny Kryshkin.

Despite the fact that the EU has taken tough austerity measures and is planning to cut the budget deficit, it is risking another economic recession. This opinion was expressed by the authors of the report. They emphasize that a repeated recession in the EU countries and stagnation in the U.S. and Japan may trigger another wave of a global economic crisis.

This pessimistic assessment is based on the state of affairs in the economies of Greece, Ireland, Portugal and Spain, the four countries that were most affected. Greece and Ireland managed to avert a collapse of their financial systems. However, this required incredible joint efforts by all EU member states. Ireland alone received 85 billion euro and with serious risks. Stabilization loans from the International Monetary Fund and the EU are being used to cover budget deficits and support banks. Nevertheless, neither Ireland nor Greece has solved the problems that they faced last year. Here is an opinion from an expert at the Institute of Europe, Vladislav Belov.

“The situation is developing according to the prior scenario. Greece, Spain, Portugal and Ireland have taken austerity measures to reduce the budget deficit through cutting government spending, the salaries of public servants and social expenses, and increasing taxes. At the same time, France and Germany are making attempts to consolidate their efforts. However, the problem has not been solved yet. As before, there is a danger of default, as far as the Euro-zone goes,” Vladislav Belov said.