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European Debt Crisis

Eurozone crisis remains far from over

Stephen Beard Jun 18, 2012
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European Debt Crisis

Eurozone crisis remains far from over

Stephen Beard Jun 18, 2012
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Jeremy Hobson: The election results are in from Greece, and the pro-bailout, pro-austerity New Democracy party narrowly beat the anti-bailout Syriza party in yesterday’s elections and is now trying to form a coalition government. That means the euro stays together for the moment.

For the latest, let’s bring in Stephen Beard at the Marketplace European desk in London. He’s with us live. Good morning.

Stephen Beard: Hello Jeremy.

Hobson: Well Stephen, it seems like maybe this is crisis averted for the global economy for now?

Beard: Yes, Armageddon’s been postponed. As you say, the center-right party, New Democracy — which broadly supports the terms of Greece’s bailout — has come out on top. And the party leader, Antonis Samaras, says this is a vote for stability.

Antonis Samaras: Today, the Greek people express their will to stay anchored with the euro; remain an integral part of the eurozone; honor the country’s commitments; and foster growth.

I don’t like to be a party-pooper, Jeremy, but Samaras won only a narrow victory. He has to form a government with other parties, and the main anti-bailout part — as you pointed out — did very well in the election and has vowed to continue opposing the budget cuts and so on. So any new government is likely to struggle. We’ve got some breathing space, but the Greek crisis seems far from over.

Hobson: Well, and you’d think that people across Europe would feel more confident about the future of the euro; but I saw this morning that borrowing costs in Spain are still going up — they’ve reached a record level.

Beard: That’s right. I mean, the spotlight back on Spain. Last week, of course, we had the Spanish banks bailed out. But investors are now betting that the Spanish government’s going to need bailing out too — the economy’s in recession; tax revenues are falling and welfare payments rising, making it more difficult for the government there to make ends meet. So the eurozone crisis continues, and investors don’t have much confidence the G20 meeting in Mexico’s going to produce any solutions.

Hobson: Marketplace’s Stephen Beard in London, thanks you Stephen.

Beard: OK Jeremy.

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