Bank bailouts in EU could reach 16 pct of GDP: study

0 Comments | AFP, June, 2009

BRUSSELS (AFP) — European nations need to find a "credible exit strategy" for their public finances as the aid shelled out to shore up banks could reach 16.5 percent of GDP, an EU report warned Tuesday.

In its annual report on public finances, the European Commission estimated the direct fiscal costs of the current crisis in the EU anywhere in a broad band from 2.75 percent to 16.5 percent of gross domestic product (GDP).

Which end of the estimate the final figure veers towards depends partly on how well governments manage to recover their cash injections and loans, the commission said in a statement.

Rising public debts and planning by governments to support the financial sector, together with likely increases in spending on aging populations and slowing growth...