A new study by Atradius Economic Research, titled “Is the Euro Crisis Over?,” finds reasons to support a newfound confidence in a continuing European Union rebound from a harrowing lack of growth in recent years, but also sees reasons to keep the champagne bottles corked for the foreseeable future.
Atradius analysts found that the austerity measures, structural and institutional reforms in high-debt nations as well as better supervision in the banking sector have all contributed to a return of positive momentum and growth in many countries where it once looked like there was no light at the end of the tunnel. “European politicians are right to point out that the stress and imminent crisis has faded,” the report argued. “The existence of the euro is no longer questioned.”
The dangers of a slip backward, however, are ongoing. Atradius noted the debt problem, while better than earlier this decade and late last, has yet to be properly resolved. The debt-to-economic-output ratio still exceeds 100% in Ireland, Portugal, Belgium, Italy and Greece. Unemployment also remains at record levels in multiple Southern European nations. In addition, even though the years of sacrifice and positive reports about the economic situation are apparent, other reforms are still needed, but the political will to make tough choices is fading .
“The institutional framework remains insufficient and reform efforts are hindered by complacency and reform fatigue…this leaves the euro area vulnerable to a new crisis in the future.”
- Brian Shappell, CBA, CICP, NACM staff writer