Core-Periphery Europe?

Euro Crisis

Written in January 2011
Estonia has just adopted the Euro as it’s currency in January. It comes at a time of uncertainty and debt within the Eurozone and around Europe in general. It started with Iceland in 2008, spread to Greece, then Ireland and now to Portugal. Discussions about the state of Italy and Spain have been reported in the media over recent months. Greece and the Irish Republic have both agreed to bail-outs from the European Union and International Monetary Fund to help them out. Greece had a 110 billion euro bail-out from the European Central Bank and IMF (Times 15/1/2011 page 62). Wikileaks revealed that Iceland had requested a $1 billion loan from the USA in 2008 (Times 15/1/2011 page 52). Ireland’s bail-out has amounted to 40 billion euros according to the Telegraph article Portugal’s debt will be around 20 billion euros which it will raise on the bond markets.

The recent rounds of debt crises and deficit problems seem to display a geographical pattern to them. All of the countries involved seem to be at the peripheral edges of Europe. Is there a risk that this will spread to more central areas? Perhaps unlikely unless Spain needs help on its debt situation? Eastern European countries such as Hungary have already had to call in the International Monetary Fund in 2008 to help with their foreign debts, whilst Romania has reduced the value of its currency by 20% last year.

The Iberian country has an unemployment rate of around 20% but has a more advanced banking and financial based economy to other countries that are in “distress”. It seems that the European Central Bank has helped to purchase debt for the neighbour in Portugal. China has also being buying European debt with its vast foreign reserves.

China is buying euro bonds and views European government bonds as a key investment choice (Times 8/1/2011 page 55). China has around $2.65 billion of foreign exchange reserves that could be used in to help European sovereign debt.

References:
BBC News Article
BBC News Article
Eurostat

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About mappedit

Geographical practitioner with an interest in climate change, open mapping, sustainability, the transition movement, transport and many other things.
This entry was posted in China, Economic Crisis, Estonia, euro, Europe, Geography, Greece, Iceland, Portugal. Bookmark the permalink.

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