Monday 25 September 2017

A deal, yes, but questions remain

Will it work? The only possible answer is that it must. Throughout the financial crisis, the leaders of the 27 EU countries agonised too long, met too often, allowed too much to drift. Their 10-hour meeting in Brussels, which ended in the early hours of yesterday morning, had the air of a last chance about it.

Second question: Can it work? That depends less on whether the measures agreed in Brussels are appropriate than on whether they are sufficient. This applies with particular force to the decision to permit the European Financial Stability Facility (EFSF) to borrow up to €1 trillion to prop up faltering economies. Many think this figure needs to be doubled or even trebled.

It also applies in a special way to the country in the greatest trouble. The Brussels meeting made a long-expected but still dramatic decision to apply a discount, amounting to more than €100bn, to halve the Greek debt. But that gives limited cause for rejoicing to those welcoming the confirmation that bondholders can indeed be "burnt".

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