The problems in the government securities market extended to the banks, whose credit ratings were equated to those of their sovereign; the consequent tightening of the credit supply contributed to the start of a new recessionary phase; fears mounted for the break-up of the single currency.
To defend the sustainability of the public debt, fiscal policies took on a restrictive stance in the countries that had agreed to assistance and in those that feared loss of access to financial markets; an analogous policy was adopted in other countries as well, including Germany. The lack of a common budget precluded supranational action to counteract the strong procyclical impulse of national policies.