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OECD Economic Surveys: Euro Area 2010

image of OECD Economic Surveys: Euro Area 2010

The 2010 edition of OECD's periodic review of the Euro area economy.  This edition includes chapters covering exiting from the crisis, resolving unsustainable imbalances, rebuilding public finances and fiscal discipline and minimising risks from imbalances in European banking.

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Rebuilding the public finances and fiscal discipline

The public finances are in poor shape following the crisis. There has been a large increase in government borrowing as a result of the operation of automatic stabilisers and discretionary fiscal stimulus. High government borrowing also reflects the end of buoyant revenues, related to the credit cycle, used to finance unsustainable spending increases. Support to the financial system has increased government liabilities in some countries, adding to already high overall debt levels. Credit spreads for many governments have widened substantially and confidence is fragile. Budgetary pressures have been particularly severe for countries unwinding excessive private or public borrowing.

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