Excessive Deficits Shaping the Next Crisis

29.03.2016 • Politics and War

From Capital & Conflict (GBR) –

Did you know that since EU countries signed up the Stability and Growth Pact in 1998, 25 of 28 member countries have broken the rules with no meaningful penalty?

By “the rules” I mean an annual deficit-to-GDP ratio of less than 3% and a debt-to-GDP ratio of less than 60%. Those rules were designed to show fiscal stability (and growth) in the eurozone and make the euro a more credible global reserve currency alternative to the US dollar.

The good news is that only five EU countries look like breaking the 3% deficit rule this year. France, Spain, Greece, Croatia and the UK will breach the limit, according to economists surveyed in January by Bloomberg. Another three countries – Finland, Poland and Romania – are in the danger zone.

The other good news – which you might choose to see as bad news – is that this will be the lowest number of EU countries in breach of the deficit target since the start of the financial crisis in 2008. Everyone – apart from the fiscally flummoxed five – seems to have gotten their house in order. Why could that be bad news?

-Read More Here-

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