In economics, as in pilates, a strong core is what counts...

As the slow but almost inevitable resolution of the current Greek crisis unfolds (as opposed to the next Greek crisis once this deal expires) you can almost hear politicians patting themselves on the back and markets breathing huge sighs of relief. However this excellent article in today's FT points out that while everyone has been concentrating on the EU periphery, it's the core that's really rotten.





To encourage those too lazy to click links.....

"Italian total real economy debt (government, household and business) is about 259 per cent of GDP, up 55 per cent since 2007. France’s equivalent debt is about 280 per cent of GDP, up 66 per cent since 2007. This ignores unfunded pension and healthcare obligations as well as contingent commitments to eurozone bailouts.

Italy is running a budget deficit of 2.9 per cent. Government debt is around €2.6tn, approaching 140 per cent of GDP. French public debt is above €2.4tn, or 95 per cent of GDP. The current budget deficit is 4.2 per cent of GDP. France’s budget has not been balanced in any single year since 1974.

Italy’s economy has shrunk about 10 per cent since 2007, as the country endured a triple-dip recession. Italy’s unemployment is more than 12 per cent, with youth unemployment about 44 per cent. French GDP growth is anaemic, with unemployment above 10 per cent and youth unemployment of more than 25 per cent."

As ever the EU is merely kicking the can down the road. The problems have been the same since day one of the crisis. Europe has made no effort to pay down any of it's debts - either personal or national, and no real effort to clean up and recapitalise its banks. Until it does both it will simply limp from crisis to crisis.