Eurozone bound to see decades of crisis: Hans-Werner Sinn

Eurozone bound to see decades of crisis: Hans-Werner Sinn

Sat Oct 4, 2014 5:50PM GMT
http://www.presstv.ir/detail/2014/10/04/381046/eurozone-bound-to-see-econ-crisis/

The eurozone is bound to witness an economic crisis that could destroy the single currency if member states fail to implement reforms, an economic expert says.

Hans-Werner Sinn, the president of the Ifo Institute for Economic Research said the 18-member eurozone is at risk of decades of crisis and civil unrest over poor economic conditions as well as the ongoing Ukrainian crisis.

Sinn said the crisis in Ukraine would not only affect German growth but severely hit its neighbors, many of which rely on Europe’s largest economy.

“Germany is obviously affected by the Russian crisis. More than 40 percent of German companies have eastern European connections and this will have repercussions on the rest of the eurozone also, because they have their own problems and when Germany, which is one of their main customers, has difficulties, they will also be affected,” said Sinn.

He went on to say that the problem lies with the eurozone member nations whose policymakers continue to misuse capital to finance higher living standards unlocked by joining the euro, while dragging their heels on reform.

If French policymakers failed to apply the vital supply side reforms needed to stimulate growth, it could be a decade or more of economic stagnation for the euro, Sinn added.

Europe plunged into financial crisis in early 2008. The threat of insolvency has plagued heavily debt-ridden countries such as Greece, Portugal, Italy, Ireland, and Spain.

The debt crisis has forced the EU governments to adopt harsh austerity measures and tough economic reforms, which have triggered incidents of social unrest and massive protests in many European countries.

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