No. 89 - 'EU summit on 29 June 2012 - evaluations and interpretations'

Institute for Western Affairs' Bulletin (No. 89/2012): Piotr Kalka - 'EU summit on 29 June 2012 - evaluations and  interpretations'

The crisis in public finance began in the eurozone in the second half of 2009 and has continued until today.  First it affected Greece and in 2010 Spain, Ireland, Portugal and Italy. The causes of the crisis are not identical in all of these countries.  Greece lived beyond its means, which was reflected in a very high level of consumption. This consumption, financed mainly from abroad, constituted about 90% of the gross domestic product (GDP). Portugal did not manage to keep up with the structural transformations taking place in the global economy, which resulted in poor economic growth. Italy also did not develop very dynamically, which was caused by overregulation in the job market, weakness of certain parts of the service sector and excessive development of the state apparatus.  Ireland and Spain  experienced a banking crisis, which was a result of granting real estate credits on too large a scale and the „burst of speculative bubbles” on that market. The banks had to be aided by the state.