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Greece Debts-Effect to the European Countries

by admin on February 10, 2013

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Recession is happening around the world and everybody is affected by it. Greece is just one of the nations that is experiencing economic decline and problems that is brought by it such as increase in number of unemployment. For five succeeding years the recession in Greece continues on worsening where a quarter of its adult’s population is unemployed.

The European ministers have been striving to solve this Greece crisis and have given its go signal in letting the country the amount that it needs to survive from its dilemma. Greece has been waiting for the green light since the month of June because it is from here where they will get the cash to pay the wages as well as the pensions for the month of December. The country will receive another bailout loan amounting to 44bn Euros.

Greece is one of the 17 countries in Europe that uses euro and these countries are referred to as Eurozone. During global recession several Eurozone’s countries have been borrowing money where some have been spending so much and been losing control in handling its finances. This is the first country that took the multi-billion bailout from its neighboring countries in Europe where next is Portugal and the Ireland. The countries that availed the bailout agreed to spend cuts before the loan is approved. Despite of the loans that it received still Greece is in crisis and in dire need of more funds.

Greece constituents are already protesting on hike taxes and more unemployment however the government has been forced to do and implement tough plans for it to be able to receive the bailout cash. The Government was relieved when it has received the green light for the additional bailout cash however the opposition party is not convinced about it which they call it as “half-baked compromise”.

The consequence of acquiring this additional bailout cash is that if Greece fails to pay the debt, this might go into bankrupt and might be the first European country that will leave euro currency. Other countries that are experiencing this crisis might have the same fate which is detrimental to Europe’s strength. The bad impact of this scenario will greatly affect the Greeks where they will feel shoddier because of the devaluation of the value of their money. That is why countries in Eurozone like the Portugal and the Ireland resorts to raising taxes and cutting budgets that result to unemployment for it to be able to pay the debt and be able to borrow more funds.

UK is also affected by this crisis even it is not a member of the Eurozone. However it is a member of the International monetary Fund that lends money to different countries in the world. Greece and other European countries has acquired loans from some British banks and if in any case that the country will not be able to handle its financial crisis and will go bankrupt, these banks will surely lose billions thus it will greatly affect UK’s economic  situation.

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