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February 24, 2010

'Fragile' Economic Recovery, Rising Debt Worries Europe

There are growing concerns that rising debt levels could threaten Europe's economic recovery.

European Union's Economic and Monetary Affairs Commissioner Ollie Rehn said Thursday that while the EU economy is still likely to grow slightly this year, its recovery is "fragile."

Rehn and other European economic officials say they are especially concerned about Greece.

Greece's total debt amounts to more than the country's yearly economic output, prompting two of the world's major credit rating agencies, Standard & Poor's and Moody's, to warn they may downgrade the country's rating.  If they do, Greece could have more difficult time raising money to pay back its debt.

The head of Germany's Federal Finance Agency, Carl Heinz Daube, said in a London conference Thursday that Greece's failure to pay back its debt could have huge consequences for countries using the euro.  He said that perhaps it could lead to "a collapse of the whole system."

Some information for this report was provided by AFP, Bloomberg and Reuters.