The European Union and the crisis of Nation-States

In the economic global world, the year of 2011 was marked by the economic crisis in the European Union.
In light of the economic global world that we live in today, the crisis spread to the four corners of the world, knocking indices of stock exchanges and creating a wave of pessimism.

Some of the causes, and the most important ones, for this huge crisis are:
  • High public debt, mainly from countries like Greece, Portugal, Ireland, Spain and Italy;
  • Lack of coordination of the EU policies to address issues of the public debt created by the State members.

Unfortunately, this crisis has been having disastrous consequences such as:
  • Avoidance of capital from investors;
  • Shortage of credit;
  • Increase in unemployment;
  • Popular discontent with cost-cutting measures adpoted by countries as a way to contain the crisis;
  • Decreasing ratings (given by rating agencies) of nations and banks of countries involved in the crisis;
  • Fall or low growth in GDP of EU countries due to the economic slowdown in the bloc;
  • Contamination of the crisis to countries outside EU. The crisis may, according to some economists, cause global economic recession.

Meanwhile, some actions are being applied in order to address the crisis. Among them:
  • Implementation of an anti-crisis economic package (released on 27/10/2011)
  • Greater involvement of the IMF (International Monetary Fund) and the European Central Bank;
  • Financial aid to countries with more economic difficultiessuch as Greece, Portugal and Ireland;
  • Definition of a Fiscal Pact, whose objectives are to ensure the balance of public accounts of the European Union nations and create systems to punish countries that break the pact. It is worth noting that the UK did not accept the pact, a fact that increased the political crisis in the region.

    * The anti-crisis actions are coordinated primarily by France and Germany.