Les Echos: The Euro Discord


ECB/IMF Irish Unemployment Guarantee

ECB/IMF Irish Unemployment Guarantee

Via PressEurop.eu, from the French Les EchosThe Mess at the Heart of the Euro:

Having stayed out of the euro, the United Kingdom has hung on to its freedom to manoeuvre and is now steadily distancing itself from continental Europe. The declining value of sterling and its links with the Commonwealth and the Far East will enable it to stimulate its industry, and even to act as a European bridgehead for emerging economies exporting to the EU.

At the heart of the eurozone, Germany – now the dominant euro power – has adopted an eastward looking strategy, which has re-established its historic sphere of influence, while the westward looking policy prompted by the Soviet threat and the Berlin Wall has been set aside definitively. The development of ties with Central Europe and Asia has enabled German industry to win market share from rival EU economies. And with this in mind, it is worth noting that in many respects Germany’s trade surplus is simply a reflection of the trade deficits of its neighbours. Berlin clearly holds a winning hand. The countries of Eastern Europe have become its industrial workshops, Russia has become its storehouse of energy and raw materials, while China and the Far East have provided it with an excellent market for its household goods.

… Spain has seen its hopes vanish along with its property bubble…

The over-valuation of the European currency is now a major problem for France and the countries of southern Europe, increasingly unable to compete with emerging economies. But closer to home the problem is even more serious, because we have reached a point where several European countries have a serious problem of competitiveness in relation to Germany…

Sterling has hung on to its freedom. With the euro, the ability to resist stress is much greater, but without devaluation or any alternative mechanism, weak countries will be hindered in their efforts to regain stability and competitiveness. And at the same time, there will be no compelling reason for Germany to re-evaluate. Which for Germany is… a fantastic opportunity.

Read more.

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