UNITED NATIONS – The increasingly precarious financial situation in Europe remains the biggest threat to the world economy, warns a U.N. report released here.
The “World Economic Situation and Prospects 2012” (WESP 2012) released Friday focuses on the need to avoid austerity measures and promote growth and job creation.
Rob Vos, director of Development Policy and Analysis Division of the U.N. Department of Economic and Social Affairs, told IPS, “The debt problems and financial sector fragility in Europe, but also in the United States, continue to be a source of ‘de-leveraging’ whereby businesses, households and banks are trying to restore their balance sheets, but this is holding back consumption and investment demand as well as normal credit flows.”
Vos told reporters last week that Europe is struggling with a “vicious circle” based on high unemployment, banks’ exposure to sovereign debts and fiscal austerity.
“The situation is very fragile and we could fairly easily fall into a trap,” he said.
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