“The countries in the south (of Europe) will need an additional debt haircut. I don’t see how Greece, Spain and Portugal can ever really grow again without a haircut,” Aghion said in an interview with the weekly Die Zeit.
“Banks in southern Europe will need further assistance from the European Central Bank and the stability fund,” he predicted.
Aghion also called for a reform of the fiscal accord agreed by eurozone states earlier this year.
“If growth this year comes out lower than expected, we’ll need the pact to be more flexible so as to be able to tackle structural reforms,” the economist said.