Doubts rebounded yesterday over Europe’s ability to solve its debt crisis and rescue the imperiled euro, as investors worried that plans for closer fiscal unity will bring little immediate relief and exposed the continent’s deep political divisions. British Prime Minister David Cameron was the only leader among the European Union’s 27 members to refuse last week to join a plan under which nations submit their budgets for central EU review and limit the deficits they can run.
As the rift between Britain, which has its own currency, and the 17 nations that use the euro created uncertainty about the deal’s implementation, ratings agencies Moody’s and Fitch warned the plan did not even properly address the problem of lowering existing European debt.
Stocks and the euro fell sharply yesterday — to US$1.3183 from US$1.3370 — as market confidence in the plan and Europe’s ability to end the crisis ebbed. In Italy, one of the continent’s most troubled economies, workers angry about government austerity reforms went on strike and held nationwide rallies. Germany’s DAX ended the day 3.4 per cent lower, Milan’s stock index was down 2 percent and Italy’s borrowing rates rose, indicating growing fears about its financial future. (AP)
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