The Global Financial Crisis Has Caused A Massive Deterioration Of Public Finances

1465 WordsDec 23, 20166 Pages
The global financial crisis has caused a massive deterioration in public finances in the euro area. The 2009 recession severely curtailed public revenues and weighed heavily on the welfare state. In addition, states have boarded on bank bailouts and costly stimulus packages. In 2010, no country belonging to the euro area was able to comply with the Stability and Growth Pact (SGP). Public debt in the euro area increased from 65% to 85% of GDP between 2007 and 2010. This debt crisis was certainly foreseeable, but the difficulty with the debt of the states lies in the history that can be made for each country, notably Greece, Ireland, Spain, Italy and Portugal. In fact, all countries have followed different paths and today they are burdened with debts more or less important that have multiple causes. The common cause that has weighed in all states is the gradual weakening of economic growth. Beginning in the 1970s, with highs and lows, the euro area tends to grow less strongly, resulting in a limit on the resources of states to meet their needs. We also observe the widespread phenomenon in all Western countries and Japan, namely the demographic aging, which gives rise to additional burdens with which European states can not "cheat", cease paying pensions or cease Care for elderly people who are sick and dependent. These are general factors to which are added factors such as the lack of awareness of the new competition of Asian and emerging countries, which affects both the

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