Tag: public debt

The German government's proposed debt-restructuring mechanism immediately shifts weaker eurozone countries towards default, write Simon Johnson, former chief economist of the IMF and Peter Boone, chairman of Effective Intervention at the London School of Economics' Centre for Economic Performance.

There is grounds for optimism that structural reforms in the euro zone will succeed, writes Edmond Alphandary, a former French economy minister and chairman of the Euro50 Group.

Citizens in France, Italy, Spain, Germany and the UK – the five largest EU countries – want their governments to cut spending rather than raise taxes to reduce deficits and public debts, according to a new Financial Times/Harris poll.

The Irish government has announced plans to establish a 'bad bank' in a bid to quarantine toxic assets and restore confidence in its ailing financial system. The move comes as part of a tough emergency budget, and makes Ireland the first EU member state to adopt such a strategy to deal with the credit crisis.

A shift to a more flexible interpretation of the rules plus more focus on the sustainability of public finances, as advocated by French, German and British finance ministers, would put Italy under pressure.

The paper warns that while the future EU Member States' public debt is relatively limited today, its medium-term stabilisation is not always guaranteed.

Leading economic experts made the case for a fundamental reform of the EU's Stability Pact rules in an annual report on the European economy presented on 12 February 2003.