Greece’s economic crisis affects European Union

Greece’s economic crisis affects European Union

Greece’s economic crisis affects European Union

The common European currency, Euro was considered a huge success before the world economic crisis. In seven years of trading, Euro that started from $1.12, reached over $1.60. The world crisis hit hard the European currency and things are still looking bad. Although the world is recovering after the huge economic crisis, Euro is still in trouble. This time Greece is the one that pulls the Euro down.

Greece is one of the 16th European Union member states which have adopted the euro currency as their sole legal tender. Belgium, Cyprus, Finland, France, Germany, Ireland, Italy, Luxembourg, Malta, Netherlands, Portugal, Slovakia, Slovenia and Spain are the rest of the Eurozone members.

Greece has a national debt estimated at over €300 billion ($413.6 billion). This is bigger than the country’s economy, and some experts estimate that the national debt will reach over 120% of gross domestic product in 2010. The Greek government has started to cut expenses and has implemented austerity measures aimed to reduce the deficit by more than €10 billion ($13.7 billion). It also increased taxes on fuel, tobacco and alcohol, raised the retirement age by two years, and applied tough new tax evasion regulations.

All members of the Eurozone agreed a rescue plan for Greece, but will be used only as a last resort. The plan includes loans from other Eurozone countries and funds and technical assistance from the International Monetary Fund.

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