Pandemic-hit European governments see ghost of debt crisis

Jan 18, 2021

European governments fear the COVID-19 pandemic will punish the most fragile economies the hardest, widening gaps between European Union member states and reviving memories of the eurozone debt crisis.

Much has changed in the bloc’s economy since the crisis a decade ago, but recent data shows that the countries that suffered the most back then are still the most vulnerable today.

Eurozone finance ministers, meeting by videoconference, discussed their worries Monday, with soaring public debt and stagnant wage growth topping their lists of concerns.

Greece, Spain and Italy all share towering debt levels but, to make matters worse, they are also service-based economies highly dependent on tourism that has ground to a halt because of the pandemic.

“The crisis is deepening existing imbalances, which had been gradually receding before COVID-19,” the EU’s economic affairs commissioner Paolo Gentiloni told reporters after the talks.

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