Euro Zone Crisis
The euro zone crisis was triggered in 2009 when Greece's debts, left by its previous government, reached a record 300 billion euros, leaving the southern European economy with debt levels more than four times higher as a proportion of gross domestic product than the official euro zone cap of 60 per cent of GDP. Since the original problems were uncovered, Greece has been bailed out twice, and lenders have also had to rescue Ireland and Portugal. In the latter half of 2012. Cyprus also required a bailout.
Austerity will put 25m Europeans into poverty, says Oxfam
Europe faces a "lost decade", with the number of people trapped in poverty across the continent set to rise by up to 25 million by 2025 unless austerity policies are reversed, according to a damning new report from aid agency Oxfam.
The charity, which is better known for delivering relief programmes in developing countries, says the damage being inflicted on many European societies is reminiscent of the devastation wrought by the strict "structural adjustment"programmes imposed on poor countries by the International Monetary Fund over the past 25 years.
Countries in Latin America and Asia that turned to the IMF for help in the 1980s and 1990s were often forced to slash public spending and liberalise their markets in exchange for rescue loans.
"These policies were a failure: a medicine that sought to cure the disease by killing the patient. They cannot be allowed to happen again," said the strongly worded report, due to be published yesterday.
Max Lawson, Oxfam's head of advocacy, said: "We were founded in 1942 because of the famine in Greece; no one would have believed we would be here 70 years later, saying, Greece is in a terrible state."
Using research carried out by thinktank the Institute of Fiscal Studies into the likely impact of austerity on poverty levels in the UK, and extrapolating it across all 27 European Union member-states, Oxfam predicts that relative poverty, defined as the number of people living below 80 per cent of median income, could rise by between 15 and 25 million people by 2025.
"The European model is under attack from ill-conceived austerity policies sold to the public as the cost of a stable, growing economy, for which all are being asked to pay.
Left unchecked, these measures will undermine Europe's social gains, creating divided countries and a divided continent, and entrenching poverty for a generation,"said the report.
With the EU's finance ministers due to gather in Vilnius, Lithuania, today, Oxfam is calling for them to adopt a radical new agenda of more progressive taxation, to ensure that the wealthy pay their fair share towards the cost of public services; rising investment; and protection from spending cuts for vital public services such as health and education.
The sovereign debt crisis in the eurozone has seen a series of countries, including Greece and Portugal, accept swingeing public spending cuts, mass privatisations and drastic market reforms, as the price of receiving bailouts from the IMF and their European neighbours.
Financial markets have been calm in recent months, but a number of senior European officials, including German finance minister Wolfgang Schauble, have conceded Greece is likely to need a new rescue package, worth up to €10 billion (HK$103.16 billion).