By @YiannisMouzakis and @NickMalkoutzis
Fiscal discipline is an understandable part of moving the eurozone towards closer union and debt mutualisation but the manner in which it is being implemented in Greece, Portugal and Spain is putting the economic viability of these countries and the single currency in doubt. Implementing austerity but not taking measures to encourage growth threatens to lock these countries into a death spiral. The eurozone needs to strike a balance between the structural reforms, the fiscal housekeeping and the growth initiatives that are needed in southern Europe. As Martin Wolf wrote in the Financial Times last week: “Far too much policy making and advice neither recognises the post-crisis challenges nor crafts effective answers. The heart of the matter is accelerating de-leveraging, while promoting recovery.”
If this issue is not addressed quickly, Greece will slide past the point of no return. Portugal and Spain could quickly follow. A crisis that has created so much disagreement and division within Europe will leave the people of these countries alone to face the terrible fallout caused by the lack of courage and imagination shown by policy makers who refused to see the signs of impending danger. Our vision of a prosperous, united future would be replaced by the mutual wretchedness of a tragic economic present.
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