If it came from Nigel Farage no one would be very surprised. Or from one of the band of German professors who launched the far-right AfD party. But the latest warning of a fresh crisis in the eurozone comes from a far more unexpected source: the European Central Bank (ECB). In its financial stability review published today, the ECB warns that the single currency could soon be plunged into a replay of the trauma of 2011 and 2012. Unfortunately, it is almost certainly right.
The review, published twice a year, is intended to warn the markets of impending risks to the system. Today’s update explores a familiar cocktail of risks, from the potential for a bubble in AI stocks to the danger that the return of tariffs might pose to the trading system. But it is the section on the risks to the eurozone which catches the eye. ‘Elevated debt levels and high budget deficits, coupled with weak long-term growth potential and policy uncertainty, increase the risk that fiscal slippage will reignite market concerns over sovereign debt sustainability,’ it notes.
Both Italy and France look alarmingly like Greece back in 2010
Roughly translated from the dry language of central banks, what it means is this: we are bust.
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