EFR Growth Report 2012

Five years into the financial crisis, economic growth remains low across Europe. In some parts, output is continuing to contract. The severe fiscal stress of some European governments raised the spectre of sovereign defaults or the disintegration of the single European currency,with systemic implications.

Without a return to growth, European governments will find it difficult to solve their current
fiscal problems or to honour their unfunded promises to provide pensions and healthcare for
their aging populations. Low growth over a prolonged period of time may lead to increasing
unemployment, declining incomes, lower asset values and under-funded retirements. The
gains made by the euro to the integration process in Europe are under threat as a result of the
sovereign debt crisis.

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