ABSTRACT
Compounding the economic downturn of 2008–9 was a lingering crisis that commenced in 2010 afflicting the so-called PIIGs (Portugal, Ireland, Italy and Greece) centred round sovereign debt problems, ushering in austerity measures by the afflicted euro-zone members at the behest of the European Union, European Central Bank and the IMF. Debt levels generally rose across the Continent, reflecting more sluggish growth. A resurgent Germany proved the exception, paradoxically reasserting its dominance in some ways yet reluctant to act as the leading European creditor. The dire situation rekindled the debates over the future direction of the European Union and brought the longevity of the single currency into doubt. By 2011, the resolution of the sovereign debt crisis was an all-consuming issue, leading to the collapse of several governments unable to cope, threatening an even greater banking crisis, with the reverberations seen as likely to tip much of the world economy again into recession. Indeed, having begun its life in benign economic conditions, the future of the euro-zone came under threat from a debt storm that refused to sweep through as politicians struggled to find a resolution that could reassure the unforgiving financial markets, which sensed blood. Crisis followed crisis as more troubled economies emerged, while those receiving aid struggled to implement contingent austerity measures, which created a political backlash from their people, bringing protestors on to the streets and condemning the politicians associated with them to defeat at the next election. Failure to find a resolution produced periodic outbursts of near panic and dire predictions, followed by calmer conditions until further developments fanned the flames once again. For instance, Jacques Delors, President of the European Commission from 1985 to 1995, was quoted by Le Soir in August 2011, warning that ‘Europe is on the edge of the abyss’.
