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Europe’s Weak Spots Ready to Become New Crises
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Europe’s Weak Spots Ready to Become New Crises

Enrico Colombatto
GIS, 2016
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Editorial Rating

8

Qualities

  • Analytical
  • Background
  • Engaging

Recommendation

The European Union is facing considerable weaknesses in banking, public debt and growth that place the Continent at risk for further crises. Policy makers are looking to quantitative easing and zero-bound or even negative interest rate policies for a solution, but according to economics professor Enrico Colombatto, their remedies have been unable to spur growth. Executives and investors with an interest in one of the world’s largest economies will find immense value in this brief but compelling report, which getAbstract highly recommends.

Take-Aways

  • In 2015, GDP growth in the euro zone clocked in at 1.6%, well below the 2% to 3% needed to stabilize the region, reduce burgeoning debt levels and strengthen banks.
  • Easy money policies in the European Union have not led to expected economic dynamism; rather, the expanded liquidity has gone mostly to inflating bubbles in equities and high-yield bonds.
  • One of three scenarios could develop in 2016. First, bank failures or public skepticism about bank safety could rock the financial sector, killing off small banks as depositors flock to big institutions.

About the Author

Enrico Colombatto is a professor of economics at the University of Turin, Italy.

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