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Throughout this five year long financial crisis and the debt crisis that has engulfed the Euro zone one shining beacon of hope has been the robust economy of Germany. However, now it seems that the German juggernaut may be in danger of coming off the rails.
Even though many expats choose to retire in European countries is still vitally important to many that Europe’s economy continues on the path to recovery. Austerity has been seen as necessary to deal with threatening levels of Eurozone government debt but the danger is that a vicious cycle develops whereby cuts lead to negative growth making debt repayments ever harder.
Politicians are coming increasingly under pressure from their austerity weary constituencies leading to sometimes poor policy decision making.
Currencies.co.uk’s Stephen Hughes told The Telegraph, “The reluctance of debt-ridden countries like Spain to take up the offer of a financial bail-out leaves the region in a state of limbo.
“From a long-term point of view, eurozone woes are unlikely to go away without any kind of political solution, and this seems a significant way off. What’s more, long- term fiscal austerity measures will remain deeply unpopular without growth. This leads us to believe the euro is going to remain unstable for a considerable period of time.”
The biggest worry for expats living in Europe is that a faltering Germany could decide it is better off out of the Euro. Such a development would surely cause the complete breakup of the Eurozone and plunge Europe, and the world, into even deeper recession.
