Determinants of Debt Crisis in EU and the Recovery Efforts

European Union has taken economic and financial measures to cope with the debt crises erupted in 2009. These measures can be summarized as putting in place a bail-out mechanism and austerity measures, strengthening economic policy coordination, setting up “Stability and Growth Pact III” and the establishment of a system of macro-economic surveillance, introducing the “Euro Plus Pact” for closer economic coordination of euro-zone countries and the establishment of a permanent European Stability Mechanism (ESM). Will the European Union be able to master the debt crises? To answer this question, we will examine the economic and financial determinants of the crises. Moreover we will discuss how effective the economic and financial measures taken for the recovery of EU countries.