Will Icelandic Volcano Cause European Economy to Erupt?

It's no secret that the volcano eruption is Iceland has hit the airline industry hard. Volcanic ash is costing carriers more than $200 million a day in lost revenues, according to the International Air Transport Association.

Now, several major publications, including The Telegraph, CNN and The Wall Street Journal, are also speculating about how the incident could impact the region's broader economy.

After all, even before the eruption, euro-zone nations were not having their best year. Potential debt problem in Italy, Greece, Spain and others could lead to manybillions of dollars in bailouts just as the European economy was beginning to recover.

'Unprecedented Situation'

The European Commission appears concerned about the economic threat. Calling it "an unprecedented situation," European Commission President Jose Manuel Barroso ordered the formation of a group to study the impact of the volcanic ash cloud on the European economy, according toCNN.

But the largest industries in Europe should hardly be damaged by the volcanic ash. France's big companies are dominated by banks like Credit Agricole, pharmaceutical firms, telecom companies, utilities and retail operators, according toForbes. German industry is dominated by tech companies, financial firms, retailers, insurance companies, chemical, auto companies and consumer durable operations. Even the economies of Greece and Italy do not look terribly different from larger euro-zone nations.

Tourism will likely suffer the most from eruption-related economic pain. And that's not a minor industry considering that half of the world's top 10 most visited countries in 2008 were European. According to the World Tourism Organization, 79.3 million visitors traveled to France, bringing in $55.6 billion; 57.3 million to Spain, bringing in $61.6 billion; 42.7 million to Italy, bringing in $45.7 billion; 30.2 million to the U.K., bringing in $36 billion; and 24.9 million to Germany, bringing in $40 billion.

No matter how much the European Commission investigates the economic trouble the volcano might cause, it probably won't be able to do much about the cloud the eruption has cast over the tourism industry. A study group can't get tourists on planes that won't fly.