The Great Debate UK

Too soon to predict that EMU will wobble


foley-Jane Foley is research director at The opinions expressed are her own.-

The budget crisis facing the Greek government has drawn an array of comments and responses from various parts of the European Central Bank, the European Commission, the International Monetary Fund and the financial markets.

Academics and economists are also keen to get their pennies worth pointing out that in effect the Greek budget was an accident waiting to happen.  During the early years of the Economic and Monetary Union it was no secret that some members of the system “fudged” their numbers to comply with the budgetary criteria of the Maastricht Treaty.

Such countries should have used the good growth years to initiate structural reform and fiscal restraint which would have promoted a healthy budget.  In the event that they did not it would only take a recession to uncover the cracks that had been papered over.