The European Debt Crisis

Juraj Sipko


This  paper  analyzes  the  main  macroeconomic  indicators since 1995 in selected European Union countries as well asin  the  eurozone  until  2017.  By  using a comprehensive comparative analysis of external account development andthe  public  debt  level,  the  paper  found  that  there is a trend towards  a  divergence  process  instead  of  the  intended  real convergence  process  in  some  eurozone  countries.  In  this regard,  in  line  with  the  present  stage  of  sustainability  of public finance, the paper provides a cross­country analysis of individual eurozone countries until 2017. The  main  findings  of  the  paper  are  that  countries  that  lost their  competitiveness  had  high  current  account  deficits, which  caused  fiscal  deficits  and led to unsustainable.level of public debt in some peripheral countries. Although  the creation of the European Monetary Union was a step in the right direction, some eurozone countries have permanently ignored  the  rules  set  out  in  the  Stability  and  Growth  Pact. Therefore,  in  order  to  avoid  fiscal  unsustainability  and  put the  economy  on  a  balanced,  sustainable  and  strong economic  growth  path  in  the  EU  countries,  a  credible medium­term  fiscal  framework for fiscal union andconsolidation plan is essential. In addition, implementing structural reforms, clear commitment of individual authorities to  these  reforms,  and  a  proactive  policy  in  the  decision­ making  process,  including  improvement  of  governance  on all levels of the European Union, are needed.


Fiscal Deficit , Primary Fiscal Balance , Public Debt , Sustainability Of Public Debt

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