Europe’s Year of Living Dangerously

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Europe’s Year of Living Dangerously
Photo by DomyD, Pixbay

As we enter the new year, Europe’s economic and political crisis appears to be entering a new and more dangerous phase that could have serious implications for the euro’s longer-run survival. This is not simply because Europe is scheduled to have hotly disputed elections in 2017 in four of its major economies and because the United Kingdom is heading for a hard Brexit. Rather, it is because the European sovereign debt crisis is now lapping at the Italian shore at the very time that German Chancellor Angela Merkel’s political star is waning.

Until now, the European sovereign debt crisis, which began at the start of 2010, has largely been confined to Europe’s smaller peripheral economies. The crisis that started in Greece soon spread to Portugal, then to Ireland and then to Cyprus. Common to all of these countries was the fact that they had relatively small economies, which were susceptible to being bailed out at an affordable price to their Eurozone partners.