As we picked up our papers last week, we were forced to come to terms with the reality that the Euro’s days were counted for. Oli Rehn, Europe’s Commissioner for Economic and Monetary Affairs, first rang the alarm bells as he warned that the eurozone debt crisis was entering a dangerous phase, which would inevitably affect the future of the Euro.

European leaders were given a harsh deadline of ten days to salvage the Euro or face the disintegration of the European Union itself. Rehn’s warning came shortly after ECB’s intervention in order to prevent a complete freeze of the West’s financial sector.

…would inevitably throw Europe into a deep slump…

European finance ministers were simply told that the current unemployment rates  (16.3 m or 10.3%), the unchecked debt and the ongoing banking crisis would inevitably throw Europe into a deep slump and take the rest of the world with it.

Herman Van Rompoy, the European Council President, has been handed the task of organizing yet another make-or-break summit this week and has highlighted the extent of EU problems: “The trouble has become systematic. We are witnessing a fully blown crisis.”

…I think the market will not provide for honeymoons…

The eyes of Europe, and the World, will once again be cast on Nicolas Sarkozy, Angela Merkel and Mario Monti as they pull their heads together in hope of coming up with a feasible solution that would allow Europe’s political class to reign over the increasingly unstable financial markets; all in order of restoring confidence amongst anxious investors.

Jacek Rostowski, the Polish Finance Minister and chairman of Ecofin, has stressed that 9 December Summit will have to be followed by “extremely forceful” actions if market stabilization is to be achieved. Andres Borg, his Swedish contemporary, has openly discussed that much of this is Rome’s responsibility, “I think the market will not provide for honeymoons. They need to bring out all of the skeletons so we can see a step forward when it comes to credibility in their debt market.”

…It is still unclear how this will be achieved…

The European Central Bank is expected to lower interest rates to 1% and to deliver non-standard measures to extend loans to banks to last up to three years, in the run up to the summit.  It is no surprise that the role of the European Central Bank and the International Monetary Fund will take centre stage in the deliberations taking place. It is hoped that a consensus will be reached with regard to the IMF’s lending extension so that it can stimulate the financial firewall against contagion to both Italy and Spain of the main bailout fund.

It is still unclear how this will be achieved but it seems that both Wolfgang Shauble and Elena Salgado, German and Spanish Finance Ministers respectively, agree that an increase in IMF involvement would of benefit to all. Merkel and Sarkozy are expected to take a more cautious stance, insisting that this can only be implemented after agreeing to enforce budgetary discipline.

…affecting the prospects of the world economy…

The Chinese Central Bank has been quick to confirm fears that the European debt crisis is affecting the prospects of the world economy, as it eased leading requirements, the most obvious signal that policy makers have switched priorities from curbing inflation to shorting up growth. Chinese businesses have already complained that they have been affected by decreasing exports and a credit shortage. Economic analysts had expected this, but had failed to anticipated that it would happen so soon.

We are working towards a very tight deadline to save the Euro and crisis talks will be entered a time when the world’s economic future hangs by a thread, as uncertainty takes over Europe yet again.

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A Modern History and Politics graduate, currently working for a production agency. Interested in all things bright and colourful.

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