- Fears over growth
Economic growth in Europe and the US is stalling. Demand is weak, businesses and consumers lack confidence and inflation is rising leading the European Central Bank to increase interest rates.
- European debt crisis
Greece, Italy and Ireland have huge national debts, which they may not be able to repay given weak economic growth. So far countries have been reluctant to take the severe action needed to repay the debt – tax increases and huge cuts in public spending – as they have prompted popular hostility (and even riots in Greece).
- Lack of political leadership
Germany is reluctant to bail out the heavily indebted countries in the Eurozone, as its taxpayers’ money would have to be used. Barack Obama does not control Congress, so they may cancel his bailout plan. The private sector look to governments for leadership. Who will take charge of solving the problems?
