PIIGS in the European Economic Crisis - Brazilian News
 
 

PIIGS in the European Economic Crisis

PIIGS is an acronym used to refer to the five Eurozone nations, which were considered weaker economically following the financial crisis: Portugal, Italy, Ireland, Greece and Spain.                                  

by Rogério  Carvalho and Jairo Severo

The European Economic Crisis started with weakness caused by high deficits, which occur when a country spends more than it collects. This has occurred specially in the PIIGS, whose reflex has affected all the international scenery according to the globalization concept.

The higher risk of an unpaid debt of these countries has been the greatest threat to the economy of the UE since Second World War. There are a lot of questions concerning European Monetary Union and this reflected in the large swings in stock market around the world.

This tension results from the problems faced by some countries, which have to obtain loans and refinance their public debts. This occurs because there is a great fiscal imbalance, as a result of a fall of government tax revenue and high spendings.

The Economic Crisis  has caused the fall of ten heads of government since 2009, because they did not do anything concrete in order to solve the economic problem of their countries. The overture solutions have caused disapproval in different European countries.

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  PORTUGUAL

The country is facing an unemployment rate of 12%. The government will have to introduce extensive and urgent fiscal reforms, with austerity measure to restore the fiscal health of the country and encourage  the economic growth. The economic package brings unpopular measures, for instance: tax   increase, freeze of pensions and cuts in the employee’s benefits.


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  IRELAND

Ireland: just in 3 years, Ireland which was known as the Celtic Tiger before the precrisis period, became  a bankrupt country in the  financial crash, with  rising  unemployment  and a recession threat coming.

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  ITALY

Italy has the biggest debt of the "PIIGS": 1.9 trillion Euros.  It is bigger than all debt of Greece, Ireland, and Portugal together. The new plan of austerity contains tough measures in order to cut costs and balance the budget of the country until 2014.


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GREECE

The nation of Greece is the largest group of debtors evident in the European Union. Its debt amounts to about 142% of its GDP, the highest ratio among the countries of the Eurozone. The country is totally vulnerable to rising debt and declining revenues as a function of tax evasion. Despite the help of the EU, Greece remains in trouble. The Greek government resigned to give place to a coalition government in the country. The idea is to restore confidence in financial markets and stabilize the country's economic situation.


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SPAIN

Spain is in its worst crisis in the last forty years, reaching the highest unemployment rate among industrialized countries (22% of active population), the threat of financial bailout and the growing risk of recession. Rapid social changes pushed into poverty people who were ascending economically. More than 10 million people are classified as poor in Spain, totalizing more than 22% of the population. Austerity measures to adjust the country at the time of low growth include freezing pension increases in retirement age from 65 to 67 years old, 5% cut in salaries for civil servants, promulgation of tax increases by the socialist government, which was eventually defeated in recent elections by the conservatives. Spain should have to go over periods of fiscal adjustment, with cuts in government spending and slower growth.




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