EU economy mired in debt crisis

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BRUSSELS. December 23. KAZINFORM It has been a tough year for the European Union (EU), which is mired in a sovereign debt crisis while struggling to emerge from the global financial crisis. As a result, the 27-nation bloc's fragile economic recovery is in question.

The year-long drama, which has yet to reach its final act, posed the most grave challenge to the euro since the single currency was created in 1999. Many expect the EU economy to feel the chill for years to come.

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Alarm was raised over the EU at the very beginning of the year when Greece found it increasingly difficult to borrow from the markets. Investors were wary of the country's ability to pay back its national debts due to its deteriorating public finances, the worst in the 16-nation eurozone.

Following months of internal wrangling, the EU, together with the International Monetary Fund (IMF), activated an unprecedented 110-billion-euro (145-billion-U.S. dollar) rescue package for Greece in May after the country's borrowing costs reached unbearable levels.

In a desperate bid to prevent contagion risk from the Greek debt crisis, the EU and the IMF also set up a 750-billion-euro (986-billion-dollar) mechanism for other eurozone members which may follow Greece.

The two costly efforts did help stabilize the markets, but their effect failed to last long. Only half a year later, Ireland became the second victim of the debt crisis, and was forced to ask for a bailout in November.

By year-end, an end to the crisis appears nowhere in sight, with Portugal and Spain rumored to be the next to hold out the begging bowl. Borrowing costs of the two southern eurozone countries have risen significantly after Ireland reignited concerns that the domino effect of the debt crisis was growing, Kazinform refers to Xinhuanet.

See www.chinaview.cn for full version

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