Euro area crisis

The euro area crisis, also known as the eurozone crisis, European debt crisis, or European sovereign debt crisis, was a debt crisis and financial crisis in the European Union (EU) that occurred between 2009 and 2018.

The eurozone member states of Greece, Portugal, Ireland, and Cyprus could no longer adequately manage their debt (ie. unable to repay or refinance their government debt) and could not bail out their national banks. Assistance was needed from other eurozone countries, the European Central Bank (ECB), and the International Monetary Fund (IMF) to address the crisis.

The crisis included the Greek government-debt crisis, the 2008–2014 Spanish financial crisis, the 2010–2014 Portuguese financial crisis, the post-2008 Irish banking crisis and the post-2008 Irish economic downturn, as well as the 2012–2013 Cypriot financial crisis. The crisis contributed to changes in leadership in Greece, Ireland, France, Italy, Portugal, Spain, Slovenia, Slovakia, Belgium, and the Netherlands as well as in the United Kingdom. It also led to austerity, increases in unemployment rates to as high as 27% in Greece and Spain, and increases in poverty levels and income inequality in the affected countries.

Causes of the euro area crisis included a weak economy of the European Union after the 2008 financial crisis and the Great Recession, the sudden stop of the flow of foreign capital into countries that had substantial current account deficits and were dependent on foreign lending. The crisis was worsened by the inability of states to resort to devaluation (reductions in the value of the national currency) due to having the euro as a shared currency. Debt accumulation in some eurozone members was in part due to differences in macroeconomics among eurozone member states prior to the adoption of the euro.