Eurozone Debt Crisis

 The problems in the Eurozone seem to get worse as each day goes by. The Eurozone countries are currently trying to agree a package of measures that will tackle the Eurozone debt crisis. It seems to me that it could all be too late.

Too much debt led to the bailing out of Portugal, Ireland and Greece but this has failed to tackle the staggering £350bn debt that Greece needs to repay. There is disagreement amongst the Eurozone countries as to what to do. What is clear is that the Euro is facing its worse ever crisis.

The biggest problem in Europe is that the banks have been the main buyers of Euro Government debt.  If that is worthless then what happens to the banks that are exposed to this debt?  They cannot be bailed out again so the only way is by harsh pruning of the Greek economy.

If the situation in Greece cannot be resolved then there will be pressure for Greece to leave the Euro and return to the Drachma. The biggest concern in the EU is that this could lead to other countries being forced to leave the Euro and the currency itself could be finished.

It is very tempting for those of us who always opposed the single currency to gloat. I always thought that a 'one size fits all' economy was a recipe for disaster in Europe. We have to realise though that if the Euro fails then this has huge implications for the UK. Our biggest export market is the EU and economic turmoil there is hugely damaging for our economy. We still have the largest debt in the G20. Tackling this debt is the biggest challenge we face. We need the EU economy to be strong.