Growing Concern over European Bailout

David Cameron expressed concern over the European Crisis in his recent speech in the Commons. This comes after recent news that European ministers have failed to reach agreement over the plans to expand the European Bailout to nations such as Italy, Spain, Portugal and Ireland.

Many see a Greek default as inevitable as the country is clearly not able to repay its debts. The implications that this will have on the European Banks remains to be seen but Credit Rating Agencies have been quick to reduce the credit score of a number of major Banks over recent months. There is a strong possibility that Greece will be booted out of Europe and the Euro could collapse altogether. A sensible approach could be to limit the Euro to a smaller band of nations.

The Italian economy has also come under scrutiny of late. Standard & Poor’s have recently downgraded Italy’s A+ credit rating and Italy has been unable to flog its bonds to China. Italy has shown little growth for some time now and is beginning to show signs of distress. It is argued that Italy has struggled against growing competition from Asia and has been able to generate the entrepreneurial growth is needs. Whether Silvio Berlusconi is the right man to lead Italy to recovery remains to be seen.