CASE Policy Briefs, economic growth, Euro area, Europe, European Monetary Union, Macroeconomics and macroeconomic policy, public debt, Trade, economic integration and globalization

Euro Crisis or Debt Crisis?

The public debt crisis is not limited to Greece or to the Euro area. In fact, several developed economies face rapidly growing debt-to-GDP ratios, which raise doubts about their long-term solvency. Thus, suggesting that the Eurozone is undergoing a currency crisis or is in danger of disintegration is not the right diagnosis (or at least premature). However, if prudent fiscal policies, fiscal discipline and far-reaching structural reforms are not undertaken soon, both the EU and EMU may face serious internal tensions and obstacles to future economic growth.