European Union leaders will gather Monday for their first summit of the year. The good news is that conditions for Italy and Spain are improving. But the fate of Greece is still uncertain.
The official agenda is focused on striking a balance between more austere fiscal measures for nations with unsustainable levels of debt and policies that will help revive economic growth across the 17-member euro currency area.
The eurozone economy is widely expected to suffer a mild recession this year as governments cut spending to balance budgets. But too much austerity could make the recession worse.
"This is not a choice between fiscal consolidation and growth. We need both," said Jose Barroso, president of the European Commission, in a statement Friday.
The latest meeting of the European Council continues a string of summits EU leaders held last year as the debt crisis in the eurozone intensified. Now, with borrowing costs easing for italy and spain officials are hoping to address deeper economic and political challenges.
But difficult debt negotiations in Greece have revived concerns about a default, and investors are growing worried about portugal where borrowing costs soared to record highs last week.
"There will be a lot more talk about growth and austerity," said Jennifer McKeown, an economist at Capital Economics in London. "That's helpful in the long run and could help prevent a future crisis, but it doesn't solve the current one."
