And yet another forecast that suggests we are not close to being through this economic crisis. The larger and stronger economies may rumble through but the weaker states could be in serious trouble. The Independent:
There is also a blunt criticism of the EU's leaders: "Both European bondholders and policymakers face problems in 2011 because officials clung too long to the belief that government austerity plus bailout financing was sufficient to handle debt overhang in periphery countries.
"The recent reconsideration of that position by German Chancellor Merkel and the ECB has come too late to avoid draconian cutbacks, higher unemployment, and declining output in the periphery countries."
Most worryingly, there is also the suggestion that the current austerity packages may not work economically even if they find political acceptance: "Europe remains the weak link, not just because of its sovereign debtcrisis but also because even its fiscally stronger states – France, Germany and the UK – are tightening fiscal policy. With growth still below potential, this could push the region's more vulnerable economies into recession. Europe might still be able to muddle through, but an orderly restructuring of sovereign debt is looking more desirable as the damage from budget cuts mounts and as high-debt countries struggle to escape recession."
