Eurozone faces disaster as countries have failed to prepare for an economic downturn, top economist warns
The eurozone faces disaster in the next economic downturn because many countries have failed to prepare, a top economist has warned.
During the last financial crisis a decade ago, the single currency zone was kept afloat with interest rate cuts and a vast money-printing scheme.
But David Lipton, deputy managing director of the International Monetary Fund, said this may not be possible next time round.
![Vulnerable: During the last financial crisis, the single currency zone was kept afloat with interest rate cuts and a vast money-printing scheme](https://i.dailymail.co.uk/1s/2019/03/25/21/11441240-6848823-Vulnerable_During_the_last_financial_crisis_the_single_currency_-a-10_1553550206339.jpg)
Vulnerable: During the last financial crisis, the single currency zone was kept afloat with interest rate cuts and a vast money-printing scheme
He claimed that with interest rates much lower now than they were before the crisis struck, there is limited scope for further reductions to protect consumer spending in times of strife.
Lipton said: 'The bottom line is this: the tools used to confront the global financial crisis may not be available or may not be as potent next time.'
Many countries still have high debt following the banking crisis and eurozone meltdown, limiting their ability to bail out banks again.
And he added there should be better eurozone-wide supervision of banks and protection of savers' deposits – and he singled out Italy and others with high debts for failing to take action.
Lipton added: 'A serious recession could be very damaging for these countries, because they will be shown to be ill prepared.
'Their weaknesses could present a serious setback for Europe's goal of convergence of standards of living, productivity and national well-being.'
![Atom](https://cdn.statically.io/img/img.thisismoney.co.uk/i/pix/A%20J%20Bell%202022_122X84.png)
![TSB](https://cdn.statically.io/img/i.dailymail.co.uk/i/pix/2014/05_02/HL-Logo_122x84.jpg)
![Paragon Bank](https://cdn.statically.io/img/img.thisismoney.co.uk/modulepix/ii_thisismoney_122x84.png)
![etoro](https://cdn.statically.io/img/img.thisismoney.co.uk/i/pix/logos/etoro_122x84.png)
![Trading 212](https://cdn.statically.io/img/media.sailthru.com/composer/images/sailthru-prod-626/trading%20212%20logo.jpg)
Most watched Money videos
- Aston Martin unveils new £2million limited edition hypercar
- Watch our electrifying review of the new Ford Explorer EV
- Bugatti unveil new sports car with watchmaking-inspired interior design
- Bentley unveils record-breaking hybrid £240k Continental GT Speed car
- Step inside new high-security vehicle storage facility near Gatwick
- Honda to relaunch one of best-known sports car names in 2025
- Bugatti Automobiles launch stunning £3.2m new hyper sports car for 2026
- 1992 Ford Escort RS Cosworth used by Jeremy Clarkson to be auctioned
- Ford revives Capri with new electric SUV priced from £42,075
- Britain's favourite affordable SUV: We take a spin in the new MG HS
- The new MG Cyberster EV roadster reviewed by TiM Motoring
- Ford Capri name returns but as a sporty electric SUV
-
Amazon's £3bn AI Anthropic investment probed by Britain's...
-
Hargreaves Lansdown agrees £5.4bn takeover by private...
-
SMALL CAP MOVERS: Seeing Machines captures market's...
-
Do we have the worst roads in Europe? New survey shows...
-
Bellway sales buffered by 'moderation' in mortgage rates
-
One-of-a-kind yellow Ford Escort RS Cosworth could sell...
-
Will stock markets keep stumbling - and how to be calm in...
-
BUSINESS LIVE: Hargreaves Lansdown agrees takeover;...
-
US stock markets rally as fresh jobs data eases recession...
-
Barclays becomes the first British bank to scrap the EU...
-
BP pushes ahead with Teesside hydrogen plants despite...
-
Surging profits for Germany's biggest arms maker as...
-
Olympic challenge for TV as pay-for-view streaming...
-
Two years after landmark Highway Code rule was introduced...
-
MARKET REPORT: Crowdstrike fails to dent Beazley as...
-
Markets have a habit of freaking out but you shouldn't:...
-
Pay tax on your crypto gains, HMRC reminds investors in...
-
Deliveroo finally turns a profit... and lines up buyback...