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The viability of the Eurozone has been in question for several years now. The 2007/2008 global financial crisis that almost brought the financial system to collapse was followed by more specific crises that mainly affected the Eurozone, and particularly Greece, Portugal, Ireland, Spain and Italy. Although each of these economies had their own, specific reasons for their problems, there was one element in common: overexposure to debt.
Greece and Portugal were mainly impacted by unrestrained government spending in low-growth sectors and the inefficient use of these funds, whilst Spain and Ireland fell victim to the overexposure of their banking systems to property, culminating in a bubble, which subsequently burst. These issues led to all four markets having to formally request financial aid from the European Union and the International Monetary Fund. Italy is, seemingly, is in a better position as it has not required any financial assistance. However, it faces its own economic structural issues, in particular having a very large stock of debt that will be very challenging to manage going forward.
Source : M&G Real Estate
