The Eurozone will not dig itself out of the current sovereign debt crisis unless the issue of the uncompetitiveness of the ‘southern periphery’ countries is tackled, economic attachés were warned by a top British economist recently.
Speaking at a meeting with the AERL, Mr Richard Woolhouse, the Head of Tax and Fiscal Policy at the CBI, said the eurozone was a “rolling crisis” brought about by the creation of a monetary union formed in advance of a fiscal union.
Mr Woolhouse said while it was right to concentrate on getting institutional structures right, not enough attention had been paid to growth. The current bailout plan had “bought the Eurozone time” he said, but the rescue plan was predicated on the assumption that the “southern periphery countries” of Spain, Portugal, Greece and Italy would start to grow. “Unless there is growth of 1-2 per cent GDP, the debt dynamics will continue to deteriorate,” he warned.