As Greece is on the verge of defaulting on their debt and possibly leaving the European Union, two leaders of Europe’s largest economies renewed their call on Wednesday for Euro area nations to implement proposed reforms to counter the debt crisis threatening their common currency.
German Chancellor Angela Merkel and French President Nicolas Sarkozy issued a joint statement following a phone call with Greek Prime Minister George Papandreou. The leaders have stressed the need for “strict and effective implementation” of the fiscal reforms that Greece and other euro area nations have agreed to as a condition of their rescue programs. Euro zone leaders have agreed to provide 109 billion Euros in a package deal of low-cost loans for Greece. This bailout must be approved by all individual euro area governments.
The economy in Europe is currently taking a “nose dive” as the European Central Bank is only forecasting economic growth to be between 1.4% and 1.8% in 2011. Both of those revised numbers are down from earlier forecasts.
Greece currently stands at a 98% chance of default on their debt. A collapse of Euro area nations’ economies could be devastating to the European Union. Amid all of the ongoing turmoil there is a good, if not great chance, that the value of the Euro will start to decline as conflicting reports continue to surface.
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