The European sovereign debt crisis, often referred to as the Eurozone or euro crisis, is an ongoing financial crisis in the euro area which has made it difficult or impossible for certain nations to repay or re-finance their government debt.
Post-2008 economic crisis, economic growth rates were low and a high percentage of debt was in the hands of foreign creditors which made it difficult for some governments to finance further budget deficits and service existing debt. The countries who have required financial assistance from the Eurozone and IMF are Greece, Italy, Spain, Portugal, Ireland and Cyprus. In the EU, a crisis of confidence has emerged as a result of the stark increase in sovereign debt due to bank bailouts; this has subsequently widened bond yield spreads and increased the risk of credit defaults.
The crisis has entered a relatively quiet phase in recent months, nevertheless, the countries that have received bailouts are being watched closely and instruments to ensure that they are implementing austerity measures required of them are in full force. A fall in confidence or even the smallest sign that they are unable to keep up with repayments or implement sufficient budgetary savings could have disastrous consequences on the international markets, not only for the country in question but for the euro itself.
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