The sovereign debt crisis in the eurozone, in which Greece is teetering on the brink of a default, is a crisis of confidence in the ability of the European authorities to take decisive measures to resolve Europe's economic woes, European Commission President Manual Barroso said on Wednesday.
"The sovereign debt crisis is, first of all, a crisis of confidence in policies. Our citizens and the entire world are looking at us to see if the (eurozone) countries have the desire to carry out necessary reforms... whether Europe can generate new jobs and economic growth. The situation is serious but we have solutions to these problems. We need to restore confidence. To achieve this, we, of course, need stability and growth but political will is also necessary," Barroso said.
Global market instability in the past two months has been largely caused by eurozone sovereign debt problems, with some EU member states failing to take effective decisions to solve their economic woes. In particular, Greece has been unable to comply with the tight plan of budget consolidation, without which international lenders have refused to provide further emergency loans to the country.
In the first eight months of the year, Greece's budget deficit overshot its 2011 target of 7.6 percent of gross domestic product.
The Greek authorities announced new austerity measures in September, including large redundancies, wage and pension cuts. On Tuesday, the Greek parliament voted for a new real estate tax.
Germany is to vote on Thursday on a Eurozone plan, which includes expanding the powers of the eurozone's 440 billion euro ($600 billion) bailout fund. According to media reports, Eurozone members are divided over the idea of further support for Greece, with some member states demanding that private investors take a bigger hit over restructuring of the debt.
