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The Euro Crisis: Which countries will need help next?

  • 18 June 2012

Spain has recently requested support from the rest of the eurozone to prevent its private banking sector from failing, which amounts to €100 million. In addition to the other PIIGS states Cyprus is now rumored to be in need of help too. I think this is only the tip of the iceberg. In my recently published book on the euro crisis I investigated the level of debt across the whole of the European Union and came up with some disturbing figures. The analysis I did to evaluate the countries across the region showed the year-on-year debt of each country and the cumulative total debt. I then calculated the mean average and standard deviation of the data to predict which countries were likely to follow the PIIGS example and need a bailout.

I found that many of the countries in the study had similar debt ratios to the PIIGS member states. Out of all of these countries there were some that stood out more than others. Malta, Hungary and Slovakia all showed high debt ratios and also demonstrated a dependency on debt to compensate for poor economic growth in the downturn period of the business cycle. The Czech Republic, Poland and Romania also had huge deficits over the period indicating they may need help in the future. In addition to the large deficits across the region my book addresses the administrative problems with the European single currency. Evaluating the problems that caused the crisis in the first place then putting forward possible resolutions to those problems towards the end of the book.

In my investigation I found that the sovereign debt figures were not being disclosed in entirety and the mechanisms within the European Commission to firstly regulate and secondly reprimand eurozone member states, for not following guidelines on sovereign debt reporting, were not put in place until the financial crisis hit pandemic proportions. I also investigate the plausibility of the Euro continuing under the current economic system and suggest alternatives which could work in place of the now ineffective tools used by the European Central Bank and the European Commission. If you are interested in reading my book it is available in paperback at most leading online book shops. It is also available on Amazon Kindle here.

 

More from Peter Morgan:

Rolling Taxation System?

Rolling Forecasts Instead of a National Annual Budget

The Consequence of Tax on Foreign Investment

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