Reply #43: EU warns debt in bailout countries above forecasts [View All]

http://hosted.ap.org/dynamic/stories/E/EU_EUROPE_FINANCIAL_CRISIS?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2011-05-13-08-59-38

BRUSSELS (AP) -- The European Union warned Friday that the debt loads of Greece, Ireland and Portugal will be much bigger than previously forecast, adding to fears that international bailouts are failing to solve the region's crisis.

The EU's Monetary Affairs Commissioner Olli Rehn said Greece needed to cut spending even further than foreseen in its bailout program. While he fell short of confirming the country may soon need a second bailout - on top of the euro110 billion ($156 billion) in rescue loans it got a year ago - Rehn said its situation was "very serious" and called on opposition forces to support the government's efforts.

The bloc's biannual economic forecasts did paint a more optimistic picture of the economy of Spain - commonly seen as the next-weakest state in the eurozone - which supports the currency union's hope that the debt crisis won't draw in any other countries.

However, for the three countries that have already received or are about to get international help, debt is expected to remain a problem for some time. The higher debt forecasts, combined with larger budget deficits and weak growth, boost the complaints of many economist that the bailouts are taking too hard a toll on economic activity and are not solving the debt problem.