By Julia Pastor, in Madrid | British pro-Europe think tank Centre for European Reform (CER) has published a study in which they assure that the debt crisis is not only the peripheral countries’ fault, the so called Club Med, but also a consequence of core countries’s, such as Germany, economic practices. The essay by experts Simon Tilford and Philip Whyte, is entlited “Why stricter rules threaten the eurozone.”
“The interpretation of Northern Europe, which is the one that prevails, makes a distinction between vicious and virtuous,” says the report.
According to this approach, the deadly vice of peripheral countries has been the budget wasting and the losing of competitiveness, while the virtuous countries have managed to consolidate their public finances and improve their competitiveness due to the productivity increasing and the salary reduction.
The authors consider this is a simplistic conclusion because
“the eurozone crisis is a story of a banking system excessively leveraged as well as of a risk badly managed in the core (Germany), which derives from the excess of consumption and the useless investment on the peripheral countries.”
The essay warns that
“if the eurozone had been a true fiscal unión, it would not be suffering the current situation.”
The report takes the total eurozone public debt and its deficit rates as an example to affirm that
“after all, these figures are not worse than the ones of the US, but as the EU is not a fiscal union it faces up an existential crisis whereas the US does not.”
The British experts come to the Spanish and Irish government’s defence. They say that
“it is a mistake to blame these countries’s budgetary waste for the debt crisis: Greece is the only nation is which that is true […] In Ireland and Spain, the private sector (particularly banks and homes) are the ones to blame,” explain Tilford and Whyte.
Finally, they think that
“the creditor countries cannot be absolved of any fault. The exports increase in Germany or The Netherlands was caused by the foreign indebtedness increase.”
However, the object of the their most fierce attack is the core countries’ banking system, since
“the channels for the capital that flew from the core to the periphery were the banks, and consequently, the extent of leveraging in German, Dutch or Belgium financial institutions is higher than in the peripheral ones.”
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