Deutsche Bank warns SIX EU countries show warning signs of ‘fiscal crisis’
SIX European countries are showing early warning signs of fiscal crisis according to Germany’s largest lender.
By SIOBHAN MCFADYEN
Express.co.uk
Tue, Feb 28, 2017
And Deutsche Bank says that while it does not believe that populist parties will swing the votes in the Dutch and French elections causing an effective European meltdown, there are reasons to be concerned about some member states.
The euro area sovereign debt crisis has resulted in exceptionally large economic costs and required the European Central Bank to use quantitative easing to pour liquidity into the markets.
That prompted the creation of S0 indicator, the name of the early warning system the EC put in place to analyse country’s data and offer warnings on member states’ economies.
However, the identification scheme that the commission put into place to flag up fiscal stress in both the short and long term has identified six countries as being of concern.
Among those with particular issues is Belgium which has slipped into deficit and is facing decline.
Analysts are looking out for the potential of defaults or debt restructuring, recourse to exceptional official financing and strong deteriorations in the financing conditions of governments.
The goal of the commission’s early warning indicator for fiscal stress is to correctly signal the build-up of short-term risks to fiscal sustainability.
The Deutsche report reads: “Only one country showed a decline in its S0 indicator between 2015 and 2016 (Ireland, modestly).
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