Markets no longer see eurozone breakup: EU

Reported by AAP
Friday, January 4, 2013
Topics in this article:
Imf (Australia) Ltd

Currency Converter

Mark BourisMyths bustedHome loans can seem a bit complicated and overwhelming. But it doesn't have to be. Mark Bouris clears up some common misconceptions.

Investors no longer think there is a risk the eurozone could break up, European Commission president Jose Manuel Barroso says, while acknowledging the situation in Europe remains "difficult".

Barroso hinted the European Commission might be prepared to relax some of the targets set for countries in trouble to restructure their economies.

Barroso, a former prime minister of Portugal, told a seminar for Portuguese diplomats on Thursday that 2012 had ended on a "positive note" for the European Union.

"I think it is fair to say that the perception of risk in the eurozone has disappeared," he said.

"Investors have understood that when European leaders commit themselves to doing everything to safeguard the integrity of the euro, they mean business," he said.

But the situation in Europe remained "difficult", notably because unemployment was expected to be high in 2013.

Programs to correct the economies of several EU countries were having a recessionary effect even though the measures created the conditions for firm medium and long-term growth, Barroso said.

He stressed that efforts to balance public finances and to reform economies had to continue.

But he also said that "the European Union is ready to analyse the trajectories of different programs", in a reference to conditions attached to rescue packages for several countries being helped by the EU and in several cases also by the International Monetary Fund.

The eurozone countries being helped most directly are Greece, Ireland and Portugal.

Barroso said the EU could "make adjustments and the calibration needed so as to minimise the social effects" of the reforms.

He referred specifically to the case of Portugal, which has been receiving rescue help since May 2011.

He said the country was experiencing "a true situation of social emergency".

Official forecasts suggest the unemployment rate will rise to 16.4 per cent by the end of 2013.

Portugal is having difficulty meeting its targets under the bailout program.

Barroso recalled the three bodies behind the rescue program, the IMF, the EU and the European Central Bank, had decided to relax the target for reducing the public deficit, setting a figure for the deficit of 5.0 per cent of output this year instead of 4.5 per cent and of 4.5 per cent for 2014 instead of 3.0 per cent.

Keep reading - next article
17/04/2014 13:50Sydney, Australia. 17 April,2014
advertisement