Is the EU capable of bailing out troubled states?

The European Union is today under growing pressure with regards to problems in Greece, Spain and Portugal which are likely to see significant financial assistance required in the short to medium term. There are also fears that problems in these three countries could well spread to other areas of the EU and stretch the financial capabilities of the union's member states.

The EU was fairly quick to react to the problems in Greece but many are surprised that these concerns appear to have been transferred to Spain and Portugal as well. While no financial assistance has yet been passed over to the Greek government it would appear this is only a matter of time with the European Central Bank and the International Monetary Fund set to play prominent roles. However, it has become all too apparent over the last few weeks that many EU member states are struggling to finance their own economies and will be unable to increase their investment into the EU.

As we have already seen, the euro is coming under renewed pressure only weeks after being put forward as one of the stronger currencies in the world. Indeed the UK pound has benefited from a weaker euro and those who were campaigning for the government to ditch the pound in favour of the euro have now gone very quiet. There are certainly testing times ahead for the European Union and all member states!