8

Private Wealth and European Solidarity

COLOGNE – A little-discussed but crucial factor in the debate over wealth transfers from Europe’s more economically sound north to its troubled south is the relationship between public debt, GDP, and private wealth (households’ financial and non-financial assets, minus their financial liabilities) – in particular, the ratio of private wealth to GDP in the eurozone countries.

While the European Central Bank’s bond-purchasing scheme has calmed financial markets to a considerable extent, some European economies – including Italy, Spain, Greece, and Portugal – are still at risk, because they are not growing fast enough to narrow their deficits and stem the growth of their national debts. The grim irony here is that the ratio of private wealth to GDP in some of the countries that are in need of support from the ECB and northern eurozone members is equal to or higher than that in more solvent countries.