Policymakers reflect on European future amid Greek debt crisis

08:46, May 11, 2010      

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Graphics shows European Union (EU) finance ministers agreed on an unprecedented rescue mechanism worth up to 750 billion euros (956 billion U.S. dollars) to prevent spread of the Greek debt crisis and rebuild confidence in financial markets on May 10, 2010. (Xinhua Photo)

Policymakers and business leaders on Monday started a two-day brainstorming on the European economic future after European Union (EU) finance ministers hammered out a massive rescue mechanism to contain the Greek debt crisis.

"Some of our members have been living beyond their means. This is not sustainable," European Commission President Jose Manuel Barroso told a panel at the opening plenary session of the World Economic Forum (WEF) on Europe, which opened Monday and brought over 400 leaders of business, government, academia and civil society from more than 40 countries.

The Greek debt crisis raised serious questions over the growth mode in certain EU countries, where years of overspending and lack of structural reforms have left hidden troubles for the future.

In the case of Greece, it has run high budgetary deficits well beyond EU limits in the past years, resulting in grave debt troubles in the wake of the global economic crisis.

The EU rules require that member states keep their budgetary deficit below 3 percent of gross domestic product (GDP). But Greece had a deficit of 13.6 percent last year.

The debt troubles have even intensified in Greece in recent months, partly due to confused and slow response from the EU and speculative attacks in the markets.

The fiscal problem was not confined to Greece and contagion fears across the euro zone led to volatility in world markets last week, and sent the euro to a 14-month low against the U.S. dollar.

In a desperate bid to safeguard the financial stability of the euro zone, EU finance ministers agreed early Monday on an unprecedented rescue mechanism worth up to 750 billion euros (956 billion dollars) to prevent the spread of the Greek debt crisis and rebuild market confidence.

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