EU says Greek crisis a 'unique case'
By Emma Vandore |
May 6, 2010, Thursday
|
Print Edition
Print Edition
THE European Commission said yesterday that an EU bailout for debt-laden Greece would help stop the crisis spreading to other European countries because the Greek case was "unique."
Presenting a small upward revision to this year's growth forecast for Europe, EU Commissioner Olli Rehn said the market's fear that Spain and Portugal would be enveloped in the crisis was "overshooting."
"I want to underline that Greece is a unique and particular case in the EU" because of its heavy debt level and because it "cheated" on its statistics for years, he said.
Containing the crisis is crucial for the economies of all of Europe, he said.
"In order to safeguard the economic recovery which is still rather modest and somewhat fragile, it is absolutely essential to contain the bush fire in Greece so that it will not become a forest fire and a threat to financial stability for the European union and its economy as a whole."
He denied that any rescue plans were being prepared for Spain.
"We are not going to propose because there is no need to propose financial assistance," he said at a Brussels news conference.
Europe's total government deficit has tripled since 2008 and is expected to peak this year at 7.2 percent of gross domestic product in the EU and 6.6 percent in the eurozone, the EU said.
While Greece's deficit is not the highest in the EU, concerns about the government's ability to pay it back are higher because of its high debt level and weak economy.
Britain is set to have the highest deficit in the EU at 12 percent of GDP this year.
The Greek deficit is seen at 9.3 percent of GDP, compared to 9.8 percent in Spain, and 11.7 percent in Ireland.
When they created the euro, governments agreed not to let their deficits exceed 3 percent, but the rules were soon broken, even before the crisis.
In its scheduled spring forecasts, the EU executive said the 16-nation currency bloc's economy will grow by 0.9 percent in 2010, up from a November forecast of 0.7 percent, despite the crisis.
Growth in the region will be dragged down, however, by the shrinking economies of Spain, Greece and Ireland.
Presenting a small upward revision to this year's growth forecast for Europe, EU Commissioner Olli Rehn said the market's fear that Spain and Portugal would be enveloped in the crisis was "overshooting."
"I want to underline that Greece is a unique and particular case in the EU" because of its heavy debt level and because it "cheated" on its statistics for years, he said.
Containing the crisis is crucial for the economies of all of Europe, he said.
"In order to safeguard the economic recovery which is still rather modest and somewhat fragile, it is absolutely essential to contain the bush fire in Greece so that it will not become a forest fire and a threat to financial stability for the European union and its economy as a whole."
He denied that any rescue plans were being prepared for Spain.
"We are not going to propose because there is no need to propose financial assistance," he said at a Brussels news conference.
Europe's total government deficit has tripled since 2008 and is expected to peak this year at 7.2 percent of gross domestic product in the EU and 6.6 percent in the eurozone, the EU said.
While Greece's deficit is not the highest in the EU, concerns about the government's ability to pay it back are higher because of its high debt level and weak economy.
Britain is set to have the highest deficit in the EU at 12 percent of GDP this year.
The Greek deficit is seen at 9.3 percent of GDP, compared to 9.8 percent in Spain, and 11.7 percent in Ireland.
When they created the euro, governments agreed not to let their deficits exceed 3 percent, but the rules were soon broken, even before the crisis.
In its scheduled spring forecasts, the EU executive said the 16-nation currency bloc's economy will grow by 0.9 percent in 2010, up from a November forecast of 0.7 percent, despite the crisis.
Growth in the region will be dragged down, however, by the shrinking economies of Spain, Greece and Ireland.
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