Euro Area Faces Recession Risk With Little Fiscal Room

The euro area is under strain and recession risks are building, Rolf Strauch, chief economist at the European Stability Mechanism, said in comments carried by Euronews. Governments "have to create growth," he said, while warning that global instability places heavy demands on states that have only limited fiscal space to respond.

The structural side of the problem is demographic. Germany, the bloc's largest economy, is accelerating efforts to attract skilled foreign workers as its population ages, Antara reported, reaching as far as Indonesia to fill gaps in its labor force.

The two accounts point to the same difficulty. After years of cheap money and rising public debt, European governments have little room to use spending to counter a downturn, and the workforce that would generate organic growth is shrinking. Covering that gap with more borrowing has become harder as debt levels rise.