"Wage Cuts in Southern Europe Inevitable"

People ♦ Published: July 21, 2012; 15:22 ♦ (Vindobona)

Christian Keuschnigg, director of the Austrian Institute of Advanced Studies thinks that a fiscal union will not work. The recession in Southern Europe will go on.

"Wage Cuts in Southern Europe Inevitable" / Picture: © Institut für Höhere Studien - Institute for Advanced Studies

For Keuschnigg, the major problem is the „enormous indebtedness of the private sector and the public finance“. In future, private households will need more equity in order to take a loan for properties, the economist says in an interview with the Austrian newspaper "Presse". Otherwise, the next recession will cause a big insolvency surge, Keuschnigg considers. „And of course, the…