EU leaders warn of tough times ahead

The sovereign debt crisis in the eurozone cast a shadow over European leaders’ addresses.

Chancellor Angela Merkel acknowledged that difficulties lie ahead: “The road to overcome it remains long and not without setbacks, but at the end of this path Europe will re-emerge stronger from the crisis than it was when it entered it.”

However using her television address, she defended the euro, saying it had made “everyday life easier and our economy stronger”.

France’s president Nicolas Sarkozy was similarly downcast in the tone of his new year address.

“I know that the lives of many of you, already tested by two difficult years, have been put to the test once more,” he said. “You are ending the year more worried about yourselves and your children.”

I know that the lives of many of you, already tested by two difficult years, have been put to the test once more. You are ending the year more worried about yourselves and your children. France’s President Nicolas Sarkozy

Mr Sarkozy faces a re-election battle this year and has been trailing in the polls. During his new year’s address, he said there would be no more public spending cuts after efforts to ensure France holds on to its AAA credit rating and added that there needs to be fundamental change to the French economy.

He admitted that the new year might see the “fate” of France change again: “Getting out of the crisis, building a new model of growth, creating a new Europe – these are some of the challenges that lie ahead. I want to express my conviction that with our European partners, we will be stronger to deal with this,” he added.

Italy’s president, Giorgio Napolitano, called on his country’s citizens to make more sacrifices to avoid “financial collapse” in the country. “Sacrifices are necessary to ensure the future of young people, it’s our objective and a commitment we cannot avoid,” he said.

‘Increasing possibility’ of countries leaving eurozone

At an emergency summit on 9 December, European Union leaders agreed to draft a new treaty in an attempt to save the Euro and stem the economic crisis. Britain was the only country out of the 27 EU nations not to sign the initiative.

The head of the Standard Chartered bank also added his voice to concerns about the eurozone in the year ahead, saying he believes it is likely that one or more countries will leave the eurozone.

“We enter 2012 with a very difficult outlook for the eurozone…with an increasing possibility of countries actually leaving the eurozone,” Peter Sands, chief executive of Standard Chartered, told the Sunday Telegraph newspaper.

“Nobody should underestimate what a big deal that would be, because it would be very difficult to manage the contagion risk, even if it was only Greece. The disruption from that would really be quite significant. That will have ramifications all over the world.”