Europe's debt crisis simmers

 
Greek teachers protesting in Athens, 11 Jul 13 Athens: Teachers are angry about cuts - as are their public sector colleagues

To visit Rome is to be reminded of just how fragile the current calm in the eurozone is.

This morning the construction industry held its annual conference. Construction accounts for 15% of Italy's GDP. One company owner said the industry was facing its gravest crisis since World War II: 11,000 companies have collapsed, with a loss of 690,000 jobs.

There are also new threats to the governing coalition. Silvio Berlusconi - whose party is in the coalition - is fighting to avoid a ruling by the Supreme Court at the end of the month that could see him barred from public office. He maintains the legal case against him (he was convicted of tax fraud) is politically motivated. Yesterday his party disrupted proceedings in parliament in protest.

One senator said openly that if the court ruled against Berlusconi the party would leave the government, possibly triggering fresh elections. One Italian paper said the coalition was hanging by a thread.

Only this week a credit ratings agency downgraded Italy to two levels above junk status.

'Ready to revolt'

In Greece the coalition will struggle to get through parliament the new measures which will enable the next tranche of bailout money to be paid. The laws have to be passed by next week.

Nearly a dozen coalition MPs are raising objections to the deal, particularly the moves to reduce public sector staff by 12,500. A general strike has been called for next week. Police officers have been protesting and occupying offices over the loss of jobs.

Today the Greek unemployment rate went up to 26.9%. Between 700 and 1,000 people are laid off each day. I was struck by a comment made by someone who has been unemployed for two years. "Things are really terrible, terrible. We are all ready to revolt. We are on the edge. There is hunger everywhere." No one knows whether such despair will be reflected on the streets.

It is accepted that Greece has a funding gap of 4bn euros (£3.4bn; $5bn) over the next 12 months. That might require further belt-tightening. Almost certainly Greek debt will have to be, once again, restructured. At some stage German taxpayers will have to be told the truth - some of the money they loaned towards the Greek bailout will not be repaid.

Southern malaise

In Spain, Prime Minister Mariano Rajoy is facing a fresh round of allegations that he accepted illegal payments. He denies the reports, but the corruption scandal is deepening.

In Portugal the president has called on the three main parties to agree a "national salvation pact" around the current reform/austerity programme. But the political consensus has weakened. Many now say that the Brussels/Berlin strategy - with its emphasis on deficit reduction - is leading to stagnation. There are increasing doubts that next year Portugal will be able to return to the markets to fund itself.

In Cyprus, the economy has slumped badly after the bailout and very little progress has been made in restructuring the Bank of Cyprus.

Southern Europe is struggling, hoping against hope that in the final quarter of this year growth will return. It remains clear, however, that much can still disturb the superficial calm in Europe.

 
Gavin Hewitt, Europe editor Article written by Gavin Hewitt Gavin Hewitt Europe editor [an error occurred while processing this directive]

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  • rate this
    +1

    Comment number 148.

    135.powermeerkat

    "B-787- Dreamliner - no European equivalent"

    ===

    Haha! No, thank goodness. Mind you it is barbecue season, and it's always handy to have a means of starting a fire...

    (Seems it wasn't the batteries after all, perhaps).

  • rate this
    0

    Comment number 147.

    64.austriacus
    "I do not see Austrian nationalism causing much harm to the EU :-)"
    I have to say, you do convenient quite well, quite well indeed :)

  • rate this
    +1

    Comment number 146.

    Growth has to cease at some point ....

    1. fixed planet size

    2. diminishing resources

    fait accompli ............ !!!

  • rate this
    +1

    Comment number 145.

    #144.margaret
    "Health care...a right of ALL citizens...sign of a civilised society"

    I agree 100% The biggest stain on US society is its inadequate health provision for its most vulnerable.

    The UK's NHS is a great ideal - but the system's collapsing, & platitudes don't cure people. (BBC horror stories of the NHS this year include accusations of starvation in a UK hospital.)

  • rate this
    0

    Comment number 144.

    140 David

    "The US has a near-universal food stamp system for urban areas"
    --
    Dictionary definition of 'universal':

    of, pertaining to, or characteristic of all or the whole.
    applicable everywhere or in all cases
    ==

    Health care here is not a free handout like food stamps but a right of ALL citizens.

    It is a sign of a civilised society where all, rich or poor, are valued

  • rate this
    +1

    Comment number 143.

    #139/141.margaret howard

    I'll be back in the UK in August for a few weeks. I hope the old country isn't as Dickensian as I recently remember it, but the BBC's pages tell me that UK poverty is worsening.

    The US' poverty is more extreme & distressing at the margins, India-style. The UK's is less harsh but far more widespread, with millions surviving at little more than subsistence levels.

  • rate this
    +1

    Comment number 142.

    @109 Lucy

    I wonder. They might be able to produce more and sell some of it to themselves, but where would they sell the rest of the stuff they make? Schauble had in mind that if the Southern EZ cracked, Germany would still be able to sell to perceived bigger markets like China. It hasn't worked out that way. They are down 9.6% and it worries them. They know they miscalculated in many areas.

  • rate this
    -1

    Comment number 141.

    138 David

    "food stamps many of which are used to buy electrical goods, not food"

    Even the poorest people here can afford electrical goods and don't have to swap their food stamps for them.

    No vacuum cleaners, kettles irons etc for citizens of the so-called richest nation in the world?

    Where else would one find such inequality between the have and have nots? China?

  • rate this
    -1

    Comment number 140.

    #137.margaret howard

    The US has a near-universal food stamp system for urban areas. Just because a govt gives a hand-out to voters, whether free healthcare in the UK or food stamps in the US, the recipient isn't always desperately in need. Political bribes in return for votes... Don't be so naive.

  • rate this
    -2

    Comment number 139.

    122 Lucy

    "California is the fifth largest economy in world-
    and thats just one state in USA"
    ==

    Just a pimple on an ailing body?

    "Ten California cities are facing bankruptcy"

    Doesn't sound awfully impressive. How does that compare, say, to Mississippi or Louisiana?

  • rate this
    +1

    Comment number 138.

    #136.Charles Jurcich
    "food stamps are means tested, and...go to the poorest. The last I heard there were at least 10M americans receiving food stamps"

    They are mean-tested, but the test is so elastic that vote banks are rewarded for voting Democrat. There is a huge black market in excess food stamps, many of which are used to buy electrical goods, not food. Nearly 50m receive them!

  • rate this
    0

    Comment number 137.

    132 David

    "The 40% figure is absurd"

    "40% of americans live in trailers/mobile homes - Cyburbia
    http://www.cyburbia.org/forums/showthread.php?t=7
    ==

    "100% of the UK population qualifies for state-provided, free medical care"

    We have a universal health care system for all of our citizens. You really must have lived abroad for a long time if you don't know the difference

  • rate this
    0

    Comment number 136.

    132 DavidInUSA
    "Food stamps are a political bribe for votes in the US."

    Correct me if I am wrong, but food stamps are means tested, and so by definition only go to the poorest. The last I heard there were at least 10M americans receiving food stamps.

  • rate this
    0

    Comment number 135.

    131.margaret howard

    B-1 - no European equivalent

    B-2 - ditto

    SR-71- no European equivalent (after half a century!)

    F-22 -ditto

    F-35 ditto

    B-787- Dreamliner - no European equivalent

    X-47B autonomous recon/bomber plane - no European equivalent

    X-37B autonomous space shuttle - just forget it.

    Talk is cheap. As they say in Missouri: "Show me!"

  • rate this
    0

    Comment number 134.

    133You're joking.How could Germany unite with Greece?How can a nation that collects taxes and saves money unite with a nation that doesn't collect taxes and spends it faster than it makes it?How can peoples with a 1000+ year record of more than antagonism towards each other reconcile their cultural differences when they don't even speak a common language?ESA is a pipe dream leaking like a sieve.

  • rate this
    +1

    Comment number 133.

    102.austriacus

    I fully agree that unity would serve Europeans better.

    Except that unity has to be agreed upon by member-states.

    It it's imposed from above by unelected officials suffering from mania grandiosa it's not going to work and will only create a resentment and reinforce centrifugal forces which we see in action right now.

  • rate this
    0

    Comment number 132.

    Wow, this blog's still open? Not just the EU debt simmering...

    #120 "40% of Americans...live in trailer parks or prefabs. 47m people (1 in 6) are receiving food stamps"
    The 40% figure is absurd. As for the 47m, by analogy, 100% of the UK population qualifies for state-provided, free medical care: it doesn't mean they're alll poor. Food stamps are a political bribe for votes in the US.

  • rate this
    -3

    Comment number 131.

    "Shares in Boeing have fallen heavily after news of a fire on one of its Dreamliner.
    The entire fleet of 50 787s were grounded in January for problems with its lithium-ion batteries. One caught fire at Boston's Logan airport"
    ==

    Oh dear not very good news now that they are neck and neck

    In the last 10 years Airbus has received 7,714 orders against Boeing 7,312

    Another 'currency' war?

  • rate this
    0

    Comment number 130.

    #125 EUpris

    "I had no idea that those in favour of the Common Market wanted that until I moved to Germany in 1972. At first I couldn't believe it, because it is such a stupid idea"

    -- was that when you decided to learn to read ?

    --and Greece was still under the Junta -- so you have no excuse !

  • rate this
    0

    Comment number 129.

    120.MH

    It seems that it has still not registered with you that over 60% of Greek youth are unemployed

    I suggest you get 100 matchsticks and put them into 10 rows of 10 etc

 

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