“A resurgence of the debt crisis that scarred the euro-area over the past 3 1/2 years is the biggest threat facing Germany in an election year, policy makers and leading economists said.
With sovereign bond yields declining in countries such as Italy and Ireland, governments acrossEurope cannot be lulled into thinking they can let up on their budget-cutting efforts, economists including Deutsche Bank AG senior adviser Thomas Mayer and Holger Schmieding of Berenberg Bank said during Bloomberg’s first Germany Day conference in Berlin yesterday.
“No nonsense,” Schmieding said during a panel discussion at the event, urging governments not to “backtrack in any way on the achievements” made so far. “If any country tried now to undo austerity, it would likely shatter confidence, it would probably spark another row in Europe, another wave of the euro crisis, and that wave of crisis would leave us all with less business investment, less jobs across the euro area.”
Policy makers including Chancellor Angela Merkel, Europe’s dominant political leader, risk complacency as they use a period of relative market calm to shift from crisis-fighting to longer- term efforts to bolster economic growth and combat record levels of unemployment in countries such as Spain andGreece. Leaders resume a two-day summit in Brussels today that was due to tackle Cyprus, the fifth euro country to call for outside aid.
Cyprus ‘Bail-In’….”
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