Before/after

Summary of ‘Europe already has on foot in ‘Japanese’ deflation grave’

Before:

Ambrose Evans-Pritchard, in The Telegraph of October 23, 2013 discusses deflation and its disastrous effects on debt-ridden European countries.

Evans-Pritchard states that deflation currently appears to be insignificant in “low-debt” countries, such as Spain and Italy. However, as the debt ratio proceeds to rise over 300pc of GDB and inflation recently dropped to 0.9pc within the eurozone, causing a gradual fall in prices, these countries will soon be fully affected by deflation and, consequently, face a debt crisis.   

According to the article, this deflationary tendency pushes countries into a “runaway debt trajectory” that is impossible to acquit. These countries are faced with two options to prevent this predicament: Either implementing an austerity policy or increasing the inflation rate to ensure economic growth. Both solutions, however, seem to be doomed to fail as politicians do not make efforts to cut spending, and Germany refuses to cooperate to drift up inflation, simply because the country benefits from declining inflation.

The author believes that the best solution is for Italy, Spain, France and Club Med to join forces and persuade Germany to keep inflation high enough to avert deflation, as it will inevitably result in a “Japanese deflation grave” for all European countries. 

200 WORDS, NOT INCLUDING TITLE

After:

Ambrose Evans-Pritchard, in The Telegraph of October 23, 2013 discusses deflation and its disastrous effects on debt-ridden European countries.

Evans-Pritchard states that deflation currently appears to be insignificant in “low-debt” countries, such as Spain and Italy. However, as the debt ratio proceeds to rise over 300pc of GDP and inflation recently dropped to 0.9pc within the eurozone, causing a gradual fall in prices, these countries will soon be fully affected by deflation and, consequently, face a debt crisis.   

According to the article, this deflationary tendency pushes countries into a “runaway debt trajectory” that is impossible to escape. These countries are faced with two options to prevent this predicament: Either implementing an austerity policy or increasing the inflation rate to ensure economic growth. Both solutions, however, seem to be doomed to fail as politicians do not make efforts to cut spending, and Germany refuses to cooperate to drift up inflation, simply because the country benefits from declining inflation.

The author believes that the best solution is for Club Med to join forces and persuade Germany to keep inflation high enough to avert deflation, as it will inevitably result in a “Japanese deflation grave” for all European countries. 

196 WORDS, NOT INCLUDING TITLE