(one for dglh and GY, especially)
The Greeks can't balance their budget for toffee. Didn't think they needed to, since France and Germany farted in the general direction of the EU's 3% deficit rule back mid-decade. Now, all of a sudden, lenders are saying inconvenient things like "we don't fully believe you ever intend to pay us back - we might have to start charging higher risk-premium, please". And not just to Greece, but to lots of other EU countries, too.
So now the EU wants to step in to guarantee the debt so that Greece (and by extension, Portugal and Spain as well) will not fail. This plan seems to assume that a) Greece is prepared to hand over fiscal sovereignty to Brussels and b) Brussels is better at resisting pressures to spend than the Greek government. Neither of those appear to be givens, to me at least.
So we've got a euro crisis on our hands. The cost of debt across Europe is going to go up, (maybe way up) very soon, making public expenditure cuts even more urgent (if no more palatable).
Will the UK, being outside the euro, be able to sidestep this? Or will its bonds, with deficit levels very similar to those of Portugal and Spain, start to come under attack as well?
The Greeks can't balance their budget for toffee. Didn't think they needed to, since France and Germany farted in the general direction of the EU's 3% deficit rule back mid-decade. Now, all of a sudden, lenders are saying inconvenient things like "we don't fully believe you ever intend to pay us back - we might have to start charging higher risk-premium, please". And not just to Greece, but to lots of other EU countries, too.
So now the EU wants to step in to guarantee the debt so that Greece (and by extension, Portugal and Spain as well) will not fail. This plan seems to assume that a) Greece is prepared to hand over fiscal sovereignty to Brussels and b) Brussels is better at resisting pressures to spend than the Greek government. Neither of those appear to be givens, to me at least.
So we've got a euro crisis on our hands. The cost of debt across Europe is going to go up, (maybe way up) very soon, making public expenditure cuts even more urgent (if no more palatable).
Will the UK, being outside the euro, be able to sidestep this? Or will its bonds, with deficit levels very similar to those of Portugal and Spain, start to come under attack as well?
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