What Did The EU Summit Achieve?
By Shiv Kapoor: Merkel rightly believes that Europe's problems will take years to solve, but she translates that into meaning that she has time to act. The luxury of time is just not there; if Italy or Spain go from being illiquid to being insolvent, the problems that are manageable today become unmanageable. What is required, or rather desired, is something credible; something decisive; something substantial; something quick; something comprehensive. This was not achieved and so risks remain elevated. Something giving a few months or quarters visibility would help, but we remain in an environment where we watch the story unfold one day at a time. Nevertheless, there were positives; incremental positives are always welcome and equity markets rallied, but bond markets displayed skepticism as yields continued to rise.Step 1 of the European Promise
- The plan for several countries to include balanced budget requirements in their constitutions.
- Target deficit 0.5%