The European Union's Economic Affairs Commissioner said Friday the EU is working "night and day" to finalize details of a plan to stop the spread of the debt crisis. Markets were hit again Friday by concerns about the state of European economies.
Speaking in Brussels, EU Commissioner Olli Rehn said European leaders are committed to stabilizing the region's economy.
"Two weeks ago the euro-area leaders reaffirmed their commitment to do whatever is needed to ensure the financial stability of the euro-area as a whole and its member states," said Rehn. "The political will to defend the euro should not be underestimated."
Sovereign debt is a major problem in a number of eurozone countries. Ireland, Portugal and Greece have already been bailed out. But now there are fears the crisis is spreading to include bigger economies, notably Spain and Italy.
On Friday, Rehn said neither Italy nor Spain will need to be bailed out. It was an attempt to calm fears that the eurozone’s third and fourth largest economies could default on their debts.
Senior strategist at BGC Partners in London, Howard Wheeldon, says Rehn didn’t do enough to placate the markets.
He says fundamental changes need to be made to the framework of the European economy. Wheeldon says the single currency in its current form cannot persist.
“This isn't a problem of just today, this week, or next week. This is a problem that I think will be manifest in the weeks and months ahead until we see this paralysis of sovereign debt problem being resolved," said Wheeldon. "And in its present form, throwing money at it, propping it up, as we have seen in Greece with dropping over the cliff the following day, is not going to work.”
Greece received a second eurozone bailout last month after the first failed to fix its debt crisis.
On Thursday, London's benchmark FTSE 100 Index and other European markets dropped nearly 4 percent and lost billions of dollars in value.
Wheeldon says the global economy is in bad shape.
"We are looking at recession," he noted. "Certainly U.S. markets have confirmed all but that they believe a double dip is the order of the day. And if the sovereign debt crisis in Europe is not resolved in some better form than it has so far then I'm afraid that a similar situation could evolve here in Europe."
Rehn said Friday that the drama on the markets this week is “incomprehensible”.