News / Economy

Euro Under Fire as Debt Crisis Continues

Teachers hold banners and shout slogans during their protest in central Madrid. Secondary school teachers in regions around Spain began on Tuesday a strike against spending cuts they say the government is imposing as the country fights to avoid being drag
Teachers hold banners and shout slogans during their protest in central Madrid. Secondary school teachers in regions around Spain began on Tuesday a strike against spending cuts they say the government is imposing as the country fights to avoid being drag

The debt crisis in some countries that use the euro has caused social unrest and speculation that the euro’s run as a joint currency may be coming to an end.  There is a plan in place to solve the problem, but it is not popular in either creditor or debtor countries, and the outcome is uncertain. 

Europe’s economic troubles have spilled out into the streets in Greece and other countries. Workers are angry because government budget cuts, designed to fight the debt and budget deficit, are reducing services, hurting salaries and pensions, and eliminating jobs.

But France, Germany and other wealthy European nations are reluctant to take on the burden of bailing out euro partners that have been less careful about financial regulation, government spending and tax collection.

“In a way, it’s a game of chicken that’s going on, with the leaders of the creditor countries saying we want Greece to do more, and Greece saying we can’t do any more because we’re being squeezed so much that our populations are rebelling," said Professor Iain Begg at the London School of Economics. "And anyway we must have economic growth, otherwise we can’t continue.”

But it’s not just Greece, there are Spanish protesters, and protesters in Italy, as the Italian parliament voted to adopt an austerity plan.

In Britain, a European Union member that kept its own currency, the impact of the euro crisis on workers has been cushioned, but people are still worried.

“It seems already to have had an effect on our economy, and it seems as if it’s likely to have an even greater effect if it gets worse,” one woman said.

"I think there’s interdependency regardless of whether it’s in or out," expressed one man. "It’s all interconnected regardless of whether Britain is inside the euro or not.”

“You’ve got the current problem - Greece, Spain, Portugal, Italy - I mean, it goes on and on and on," another man noted. "And though we’re part of it, and we’ve got the barrier, we’re not in the monetary part of it, it’s going to affect us, as sure as night follows day.

Another woman says she recently lost her job, and blames the financial crisis. “We shouldn’t have got to this point.  Steps should have been taken a lot earlier to keep the banks curtailed and to make sure the over-loaning, or over-lending, wasn’t happening,” she stated.

European finance ministers have agreed on the outlines of a plan to bail out the countries with the most unmanageable debts.  And while success is not assured, Iain Begg thinks speculation about a euro zone breakup is unfounded, at least for now. “It’s certainly a concern, that all of this may lead to the collapse of the euro, but you find it expressed much more by what’s known in the trade as the Anglo-Saxons - the Brits and the Americans - than by continental Europeans," he said. "Who simply don’t believe that it’s a credible option.”

The next decision point for European finance ministers comes in October, when they must decide whether to go ahead with their bailout plan.

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