Mammoth bailouts across Europe

Ireland
The main problem behind Ireland’s debt problems stems from an overinflated property market and the lack of banking resources to meet bad debt resulting from this crisis. The Irish received a €67.5bn bailout fund from the EU, Denmark, Sweden, the UK, and the IMF in 2010. Approximately €34bn of these funds were directly pumped into Ireland’s banks in a bid to provide fiscal security. Meanwhile, unemployment is rising in the country though financial commentators believe that Ireland’s long-term outlook remains optimistic.

Portugal
Portugal received a €75bn bailout in a bid to stabilise its economy. These measures were put in place as a direct result of governmental overspending and an over bureaucratised civil service. To date, the Portuguese government has managed to implement measures to improve its situation and the country is seen to be moving on the right track. However, the country has an unemployment level of 14.8 percent, taxes have been increased, and pay has been frozen, on top of the government’s draconian spending cuts.

Spain
Spain is economically at risk and might have to raise funds in terms of a bailout. Spain’s public debt was $820bn in 2010. To date the country has succeeded in avoiding having to ask for external financial aid, but recent reports suggest that the country’s debt levels are still rising and that its borrowing costs are heading towards dangerously high levels. Some financial experts are concerned that the Spanish government is not implementing the necessary spending cuts. Spain has an unemployment level of 23 percent and currently appears to be heading for recession.

Italy
Political changes and a lack of belief in the Berlusconi government have led many observers to fear that Italy might be the next EU country to have to apply for a bailout.  New Italian president, Mario Monti, has declared that Italy is fiscally sound but the IMF remains unconvinced and predicts that Italy may soon have to join the eurozone bailout club. The Italian government recently held a bond sale, which underperformed by €4bn. The government has been able to implement certain austerity measure including a rise in the age of retirement to 67 by 2026.

Cyprus
The island of Cyprus, though partly inhabited by a large Greek population and affected by problems concerning the Greek banks, runs its economic affairs totally separately. The country has had to ask Russia for financial help, and in January received a €2.5bn loan. Cyprus was also recently downgraded by the international credit rating agencies and this has driven up the cost of borrowing. Cyprus currently holds a ‘junk status’ credit rating.