EU Offers Words of Support to Greece
This is the VOA Special English Economics Report.
Leaders of the European Union say they will help Greece as it struggles under a mountain of debt. They promise to take action, if needed, "to safeguard financial stability in the euro area as a whole." But the leaders did not announce any detailed plan for Greece after meeting Thursday in Brussels.
They said that was because Greece has not requested any financial support. European Commission President Jose Manuel Barroso said this means the government believes it does not need the support.
Investors had a mixed reaction to the statements from Brussels. Worries over Greek debt have pushed the euro to its lowest value in months against the dollar. European Union finance ministers are expected to talk about Greece when they meet in the Belgian capital next week.
Sixteen of the twenty-seven nations in the European Union use the euro as their currency. Now, the stronger members are seeking ways to help the weaker ones like Greece. European Union rules limit the choices for a rescue. The European Central Bank and national central banks are barred from aiding members by purchasing their debt.
European officials hope to avoid the crisis that could spread if Greece fails to pay its debts. Greece needs to borrow more than seventy billion dollars this year to finance its budget and refinance its debts.
In October, Greece said its budget deficit would reach almost thirteen percent of its gross domestic product last year. G.D.P. is the widest measure of economic activity.
Greece represents less than three percent of the euro area economy. But its deficit is around four times the level permitted by the euro group. Greece has promised to cut public spending in an effort to reduce its deficit by four percentage points this year.
And Greece is not the only country in trouble. High levels of public debt in Ireland, Portugal and Spain are also worrying debt markets.
Nations in the euro area share a common currency, but not a common financial policy. This leads to big differences in economic results. Some members have very low levels of public debt. Others have very high levels. Greece's debt could reach one hundred twenty percent of its G.D.P. this year.
Last week, the European Commission approved a Greek plan to cut government spending. On Wednesday, thousands of public employees in Greece held a strike to protest cost-cutting measures.
And that's the VOA Special English Economics Report. I'm Mario Ritter.