Euro debt crisis

Geschichteab 13 J.

From 2010, Greece, Ireland, Portugal and Spain threatened to collapse under their government debt. The EU rescued them with billions in aid – under strict austerity conditions.

The euro debt crisis began in 2010, when several eurozone countries could no longer service their government debt.

What happened:

• Greece: had lived beyond its means for years and embellished its statistics. Debt ratio: over 180% of GDP. Bailout packages: over 290 billion euros
• Ireland: a banking bubble burst. The state had to rescue the banks and itself became a recipient of aid
• Portugal, Spain: property bubble + high government debt
• Italy: the third-largest bond market in the world – "too big to fail, too big to bail"

The rescue: the "euro rescue fund" (EFSF/ESM) provided hundreds of billions of euros. In 2012 ECB President Mario Draghi uttered the famous phrase "Whatever it takes" – the ECB would do whatever it took to save the euro. The markets calmed down.

Consequences: strict austerity measures in Greece (pensions cut, taxes raised, mass unemployment). The crisis shaped European politics for over a decade.

Did you know? Mario Draghi's three words “Whatever it takes” on 26 July 2012 are considered the most important sentence in the euro's history. Interest rates on southern European government bonds fell immediately and dramatically.

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