| Click for the Finfacts Ireland Portal Homepage |

Finfacts Business News Centre

Home 
 
 News
 Irish
 Irish Economy
 EU Economy
 US Economy
 UK Economy
 Global Economy
 International
 Property
 Innovation
 
 Analysis/Comment
 
 Asia Economy


Finfacts changes from 2015

RSS FEED


How to use our RSS feed

Follow Finfacts on Twitter

 
Web Finfacts

See Search Box lower down this column for searches of Finfacts news pages. Where there may be the odd special character missing from an older page, it's a problem that developed when Interactive Tools upgraded to a new content management system.

Welcome

Finfacts is Ireland's leading business information site and you are in its business news section.

Links

Finfacts Homepage

Irish Share Prices

Euribor Daily Rates

Global Cost of Living

Irish Tax - Income/Corporate

 

Feedback

 

Content Management by interactivetools.com.

News : EU Economy Last Updated: Feb 20, 2015 - 9:33 AM


Euro is a marriage with no divorce option
By Michael Hennigan, Finfacts founder and editor
Feb 11, 2015 - 7:17 AM

Email this article
 Printer friendly page

We have in the past compared the euro to "Hotel California," the 1970s song by the Eagles rock group, which has the lyrics "You can checkout any time you like/ But you can never leave!" This month Jean-Pierre Roth, former head of the Swiss National Bank, Switzerland's central bank, said that there is no way out of the euro. “The chaos would be overwhelming.”

Roth said in an interview that the term "euro crisis" is a misnomer.

"The finance ministers came up with this term to divert attention away from them. In truth, this is a public finance crisis. National debts in Europe are high, and the outlook is grim. The population is ageing; the ratio of the working population to those who have retired will continue to worsen, health care costs are rising. In addition, the economy is growing slowly, but the European countries' social models are based on annual growth of four to five percent. This can't work."

Dreams of European Growth: France and Italy facing pre-euro economic problems

Italy's SMEs poor exporters compared with counterparts in Germany, Spain

Europe's Worst Exporter: Poor export performance of Greece

Analysis: Germany world's top surplus economy; UK tops deficit ranks

On the Greek crisis, Deutsche Bank economists said in a note [pdf] last week: "While a prolonged standoff between Greece and the euro area should be expected, we still consider a balanced agreement as the most likely outcome in the end. The risk of political accidents in the course of negotiations cannot be excluded, though."

Speaking in parliament in Athens ahead of a confidence vote which the governing coalition won, Alexis Tsipras, Greek prime minister, said that his government would not request an extension to its existing "bailout" agreement with the EU, despite pressure from Wolfgang Schäuble, German finance minister.

"I want to repeat today, no matter how much Schäuble asks it, we are not going to ask to extend the bailout," Tsipras said, saying that Greece "cannot return to an age of bailouts and suppression."

A special meeting Wednesday of the Eurogroup of Euro Area finance ministers will discuss the Greek crisis and a summit of  EU leaders will take place on Thursday and Friday.

Alexis Tsipras is due to meet Angela Merkel, German chancellor, and early next week the regular monthly meetings of the Eurogroup and Ecofin, the council of the EU28 finance ministers, will also discuss Greek demands.

“I don’t think that there should be casual talk about the kind of resolution that would end up leaving Greece in a place that is unstable or the EU in a place that is unstable,” said Jack Lew, US Treasury secretary, speaking to reporters on the margins of the Group of 20 finance ministers meeting in Istanbul.

Yanis Varoufakis, Greek finance minister, briefed Greek media on Monday, on a plan to use debt swaps to reduce Greece’s debt burden and raise €5bn-€8bn by issuing treasury bills to maintain government funding while a new deal with Europe is worked out. Greece also proposes dropping about a third of proposed troika structural reforms and these would be replaced by 10 unspecified new measures prepared with assistance from the Paris-based Organisation for Economic Cooperation and Development. Greece is also seeking to reduce this year’s primary budget surplus target from 3% to 1.49% of national output to release funds for increased welfare spending.

Wolfgang Schäuble who met Varoufakis last Thursday in Berlin was not impressed by the new Greek plan saying he expected Athens to live up to the terms of its existing €172bn bailout before he would consider new proposals.

“We are not negotiating a new programme,” Schäuble, who was also in Istanbul, said. “We already have a programme.” Schäuble added that if Greece did not want a new rescue programme “then that’s it.”

Pierre Moscovici, EU economic affairs commissioner, said a deal to extend the bailout would have to be reached by next Monday if talks were to continue.

While Greece does not want to ask for an extension of the bailout which expires on February 28, Moscovici said it was necessary to have enough time for parliaments in some Eurozone countries to approve the extension.

The Financial Times reports that Athens signalled it was ready to end a two-week stand-off over its demand to end the current bailout before embarking on a new programme. A senior finance ministry official said a “bridge agreement” could be described by its partners as “a technical extension” of the existing arrangement, "a move that would be a significant reversal of Mr Tsipras’ stand."

Greek PM Alexis Tsipras says he won't seek an extension of the bailout plan when it expires at the end of February – putting Athens on a collision course with creditors. FT capital markets editor Ralph Atkins explains Greece's crisis in five charts.

Related Articles


© Copyright 2015 by Finfacts.ie

Top of Page

EU Economy
Latest Headlines
Spain's strong recovery to slow in the next few years
Italy's Mezzogiorno is Achilles' heel of Euro Area - lowest birth rate since 1862
Euro Area GDP grows at weak 0.3% in Q2 2015
German GDP up 0.4% in Q2 2015; France's GDP stagnates
Germany's Surplus: Lots of critics; Credible solutions scarce
Euro Area industrial production dips in June and May after a flat April
Greece faces two years of recession according to EU officials
High EU youth unemployment rate not as bad as it seems
Eurozone retail PMI surges to highest since January 2011
ECB monetary policy still tight for Southern Europe
German exports fell in June — surplus at record; Exports up 13.7% year-on-year
Eurozone manufacturing sector continued to expand in July
Weak euro unlikely to have significant impact on Euro Area growth
Is Euro Area Ireland's top trading partner?: EU28 is overwhelmingly UK's
German car firms boost exports from Spain, UK, Portugal, Czech Republic, Slovakia, Hungary and Romania
Flash Eurozone manufacturing/ services PMI close to four-year high despite Greek crisis
Krugman calls euro a Roach Motel; Hotel California gets 1-star grade
Greece & Euro Crisis: July 2015 articles from Finfacts
Greece and other poor countries in Euro Area will not become rich
Euro Area manufacturing/ services PMI hits four-year high in June
Western European car market: Recovery continues
Greece could become a failed state like Venezuela
Multinational companies pay on average 30% less tax than domestic competitors in EU
EU's list of 30 tax havens omits the biggest 4 in Europe
China to invest in Juncker's European investment fund
Greek talks collapse; Game theorists gambling with future — Germany's vice-chancellor
German exports and industrial production in strong rises in April
Tackling Inequality: Scandinavian countries have the most successful welfare systems in Europe
Eurozone unemployment fell by 130,000 in April 2015 — down 849,000 in 12 months
Eurozone service sector business activity slowed during May
German 2015 GDP forecast cut; Jobless level at 24-year low
Eurozone manufacturing in modest acceleration in May
FDI into Europe at record in 2014; UK on top: Germany location for future investment
Eurozone economy loses growth momentum; Jobs growth rises
Athens leak suggests Juncker has plan for Greece
Draghi will not end QE early but warns of risks
Eurozone grows faster than US and UK in Q1 2015
German GDP at slower pace, France faster in Q1 2015
Germany may cut income tax; Germans still shun risky investments
Germany had record exports and imports in March 2015