Debt crises in EU countries and undertaken measures to face it

• Author: Irma Guga
• Pages: 143-151

143

Vol. 4 No.2

September 2018

Balkan Journal of Interdisciplinary Research

IIPCCL Publishing, Graz-Austria

ISSN 2410-759X

Acces online at www.iipccl.org

Debt crises in EU countries and undertaken measures to face it

PhD (C.) Irma Guga

Abstract

The crisis that began as the U.S. “subprime” crisis in the summer of 2007, spread to a number

of other advanced economies through a combination of: direct exposures to subprime assets,

the gradual loss of confi dence in a number of asset classes and the drying-up of wholesale

fi nancial markets. (Merrouche, O., Nier, E., 2010: 4)

Lehman’s Brothers bankruptcy fi ling in September 15th 2008 was the largest in US history and

also “o cially started” the fi nancial crises of late -2000s.

Researchers (Harari, D. 2014; Weber, C. 2015; Fritz W. Scharpf ) pointed out the fact that the

deterioration of the indicators and the economic and fi nancial situation of the EU countries

were aggravated precisely as a result of the fi nancial crisis of 2008.

The President of European Commission Jose M. Barroso, pointed a fi nger at the U.S. “This

crisis was not originated in Europe,” he claimed. “This crisis originated in North America and

much of our fi nancial sector was contaminated by, how I can put it, unorthodox practices from

some sectors of the fi nancial market.”1

Meanwhile, some others (Beker, V. 2014; Baldwin & Gros, 2015; Perez-Caldentey and Vernengo.

2012 etc.), point out that the European Union “was expecting” the crises, due to the imbalances

created between core and noncore countries that is inherent in the euro economic model.”

Anyway, this crisis found Europe unprepared, given the fact that several EU countries

had the main economic indicators far behind the established norms of this Union. In these

circumstances and in order to stabilize the fi nancial situation, EU and European countries has

taken several measures in order to mitigate the e ects and to pass the crises.

Keywords: World/European fi nancial crises, defi cit, public debt.

I. Introduction

The biggest concern of world leaders nowadays is the Eurozone crisis. In this

framework, the goal is to fi nd the right tools and instruments to get out of this crisis.

In order to make this possible, there is need to be studied the causes that led to it.

This paper is organized in three parts. The fi rst one is focused on the state of EU

countries before the crises; the second part describes the situation of EU countries

during the fi nancial crises and the last one the measures undertaken by the EU in

response to this debt crises.

II. EU countries before the fi nancial crises

The fi nancial situation of the European Union countries has been accompanied by

instability of economic and fi nancial indicators. If we have a look at the data of budget

defi cits and debt burden in the EU member states, we would see increasing trend

over the years, which has been a continuing concern for this union.

1 (The Week. June 20, 2012. http://theweek.com/article/index/229570/did-the-us-cause the-european-debt-

crisis).