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Despite the overwhelming sense of crisis in the Euro Area, recovery from the global recession is still underway. While the turbulence in financial markets, the sovereign debt crisis in Greece which is threatening to spread to other countries, and the implementation of deficit reduction measures are likely to weigh on confidence and ultimately on growth in the Euro Area, many factors suggest that their effects may be muted for the remainder of 2010. In fact, economic activity could see a further, if moderate pickup, in coming months helping to mask the medium- and long-term impact of the current crisis.
However the longer term reality is clear: without significant reforms and budget management, there is no way Europe can grow itself out of this unsustainable debt situation any time soon.