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European leaders have been criticized for moving too slowly in tackling the crisis, which started in October 2009 when Greece admitted it was in deep financial trouble. Led by Germany, the eurozone's largest member, governments have resisted sweeping solutions such as pooling their borrowing power in so-called eurobonds and have balked at increasing the financing of their bailout funds from euro500 billion. Efforts have focused instead on making bailed-out countries try to cut spending and reduce their budget deficits. The 17 members have also agreed to come up with a treaty requiring national laws to limit deficits. At the World Economic Forum gathering in Davos this week, leading European finance chiefs have sought to reassure anxious global business leaders that Europe is on track to solve its debt crisis. But Fitch said that European leaders' "gradualist" approach to tackling the crisis meant that Europe will continue to face episodes of severe financial volatility that would erode government's ability to repay debt. Fitch said the eurozone's difficulties would be compounded by a shrinking economy. "The eurozone crisis will only be resolved as and when there is broad economic recovery," Fitch said. "It is evident that further substantial reforms of the governance of the eurozone will be required to secure economic and financial stability, including greater fiscal integration."\ Greece is locked in talks to secure a crucial debt relief deal with private investors while also tackling demands from its European partners and the IMF for deeper economic reforms. Failure on either front would force the recession-bound country to default on its debt in less than two months, pouring new fuel on the fires of Europe's debt crisis.
[Associated
Press;
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