A FEW months ago investors were feeling more optimistic about the euro zone. In July the Greek government could borrow money at an interest rate of 6%, a far cry from the near-40% it was paying in 2012. Economic growth in the first quarter of 2014 was 1.2% on an annualised basis—not great, but not terrible.
That has all changed. There are now serious worries that the euro zone will succumb to a “triple-dip” recession. Only Lithuania—which joins the euro zone on the first day of 2015—and Ireland are forecast to see strong growth next year. Fears grow that the 18-member currency club may fall into deflation. Inflation fell to just 0.4% in October, well below the European Central Bank’s target of almost 2%. Among other things deflation makes debt harder to bear. Seven euro-zone countries are forecast to have public-debt-to-GDP ratios of over 100% next year; the proportion of loans in default is rising in Portugal, Italy and Greece. Even though the ECB has adopted measures to boost growth—lowering interest rates to 0.05%, for example, and buying covered bonds from investors—it remains under pressure to do even more.
Our interactive graphic (updated November 7th 2014) displays the latest economic and fiscal differences across the European Union.