Arithmetic of sovereign debt crisis in Europe and challenges ahead
Arithmetic of sovereign debt crisis in Europe and challenges ahead

Summary/Abstract: Sovereign debt crisis in the euro zone put in the spotlight the issue of restoring the balance in the public finances of indebted countries and recovered their capacity to borrow again on financial markets. Restoring fiscal balance will be in the coming years a difficult task mainly due to poor economic outlook in most EU countries. Moreover, the attempts to accelerate economic growth by means of an active fiscal policy will be limited by high level of public debt and efforts on fiscal consolidation in the most indebted countries. In the long term, the fiscal consolidation process will be hindered due to unfavorable demographic trends and resulting growth in age-related spending. The purpose of this article is to show the arithmetic course and consequences of the sovereign debt crisis in Europe as well as the challenges related to aging process the old continent’s population is going to face in medium and long-term.

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