The beginning of 2012, the 10th anniversary year of the euro, will see EU officials making further efforts to maintain the stability of the common currency. Eurozone countries need to refinance up to 650 billion euros of debt by the end of April. German Chancellor Angela Merkel and French President Nicolas Sarkozy have already planned an additional summit for January 9 in order to discuss the details of new government spending rules for the EU countries, which are supposed to be introduced in the second quarter of 2012.
In an interview for the newspaper Bild, the German Finance minister Wolfgang Schaeuble said that “this is not a euro crisis, it is a debt crisis in some euro states” and urged all EU debtor nations to strictly implement austerity measures. At present the most burning issue for the area is the Spanish and Italian debt, which the two countries need to curb as quickly as possible in order to prevent the escalation of the crisis and the breakup of the Eurozone.
In Spain, PM Mariano Rajoy's government announced on Friday that the country's budget deficit for 2011 would reach 8%, exceeding the previous estimate of 6%. In consequence, Rajoy presented an austerity plan which includes temporary tax increases and public spending cuts.
Nevertheless, Italy's debt poses currently a greater threat to the stability of the Eurozone as it is the third largest economy of the region and the second most indebted member state after Greece. In the first quarter of 2012 the country faces a repayment of 53 billion euros of debt.
Many EU officials agree that the best way to help these countries to regain market confidence and boost their competitiveness is to buy them time by the means of rescue funds.
Meanwhile in Greece the new government urges banks and insurance companies to agree to an acquittance of 75% of the country's debt, which at present stands at 50%. An agreement on this matter is supposed to be reached before the end of January.
