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Joseph Stiglitz said it's 'worse than the great depression' in some EU countries
The current situation for many countries in the EU has been labelled “bleak” as they remain in huge debts and cannot find a way out, according to Joseph Stiglitz.
The renowned economist and professor was speaking on Wednesday at the World Economic Forum’s annual meeting in Davos.
Mr Stiglitz said in a meeting titled ‘Fixing Europe’s Disunion’ the Euro was not created against a backdrop of institutions which could support it.
And as a result, he said, it is failing.
It’s worse than the great depression in almost all these countries
He said: “In Europe they have got things working in many ways better – but Europe as a whole, particularly since the global financial crisis the eurozone in particular has been near stagnation.
“I think the Euro is part of the reason the Eurozone is not doing well.
“It is only part of the reason but it is part of the reason
“When you have a single currency it doesn’t have the flexibility for to enable weaker countries like Greece, Italy, Spain to adjust and the result of that is a real, real problems.
Joseph Stiglitz said the current situation in many EU countries is bleak
“Depressions, deep recessions, where GDP today in Greece is more than 20 per cent below what it was before the crisis.
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“It’s worse than the great depression in almost all these countries.
“That will shape the reactions to politicians and to the European Union.”
Mr Stiglitz insists there was a lack of understating in member states when they signed up to the euro – since they “ did not realise” they would be giving up economic sovereignty to some degree.
A picture taken in Chicago during the Great Depression
He said: “They feel in some sense betrayed by the leaders.”
In response to the economic crisis, countries are giving up social protections and handing out wage cuts, Mr Stiglitz said.
Promises made about a closer union and globalisation have not been fulfilled, he claimed, despite intentions being good to begin with.
It was also claimed by the economist globalisation and technology are playing a role in the failure of the eurozone.
Commissioner for Economic and Financial Affairs, Taxation and Customs, said anger is spreading in the EU but remained confident measures can be taken to boost the eurozone.
People queue at a Greek bank amid their financial crisis
Pierre Moscovici said: “What people from Europe suffer from is too weak economic growth, too high unemployment and too much debt.
“Some people feel they are losers of globalisation.
“There is growing inequalities, and I think that is a question we must address better because the rest comes from it.
“We are very proud of what we have done.
“The way to combat populism is to be popular, be popular and you can solve issues.”