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4th Feb 2023

Euro has weathered debt storm, Barroso says

  • Barroso: good news, but many investors still think Greece might go (Photo: consilium.europa.eu)

Business investors are confident the eurozone has weathered the worst of the sovereign debt crisis, according to European Commission chief Jose Manuel Barroso.

In a speech given to Portuguese diplomats in Lisbon on Thursday (3 January), the former Portuguese leader said that "the perception of risk in the eurozone has disappeared."

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He added: "Investors have understood that when European leaders commit themselves to doing everything to safeguard the integrity of the euro, they mean business."

His speech comes after Portugal earlier this week became the latest EU country to break ranks on economic policy.

Its president, Anibal Cavaco Silva in his New Year address condemned what he described as the "social injustice" of the country's bailout terms and promised a court enquiry on the subject.

For his part, Barroso acknowlegded that his native country is facing "a true ... social emergency."

Amid criticism that EU-mandated austerity has caused a spike in unemployment across the Union, he conceded that the commission is "willing to analyse the completion of programmes and to make adjustments and do the fine-tuning necessary to minimise social costs."

But Barroso's remarks reflect a growing belief among EU officials that market pressure on the single currency is starting to abate.

Last month, German finance minister Wolfgang Schauble also told reporters the euro has survived the worst of the crisis, following a buy-back deal on Greek bonds.

The optimistic tone was bolstered by a survey out this week.

A poll of 778 investors in December by research group Sentix showed that the business community by and large expects the single currency to stay alive.

One in four respondents said at least one country will leave the euro in 2013. But the figure this is down from one in three in November and from 73.3 percent in June 2012.

Greece remains the country deemed most likely to leave the 17-country curtecy bloc despite the buy-back scheme.

Over one fifth of respondents sill believe that it will leave the eurozone, while 10 percent of those surveyed said Cyprus is the second most likely to go.

But in a statement accompanying the poll, Sentix commented that "investors do not expect a sudden euro end for the above mentioned countries anymore."

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