The Euro was introduced in 1999. Criticisms of the Euro Project Include A fixed exchange rate can cause an imbalanced economy. Some countries in the Euro have become uncompetitive because of higher inflation. But, there is no devaluation to restore competitiveness. This has led to high current account deficits, low growth and high unemployment. No …
The French are not too happy. The rating agency Moody have stripped France of their triple AAA rating – downgrading French debt to AA. [link] It probably wouldn’t be so bad, but their English neighbours still retain a AAA rating, despite having a much higher budget deficit. As the English would say, that’s just not …
Readers Question. We hear much about the “pensions time bomb”, as people tend to live longer and there is a bulge as “baby boomers” reach retirement age. We also hear much about the need to save for retirement. Saving *money* may mean people have more money in retirement but surely the real problem is to …
Why have countries in the Eurozone faced greater difficulties in promoting economic recovery? How does a country with its own currency find greater flexibility in overcoming a recession? 1. Impact of Currency and Bond Yields A striking feature of recent years is that countries in the Eurozone have been significantly more susceptible to rising bond …
What are the key issues affecting the UK economy over the next few years? Recession and Recovery The biggest problem facing the UK economy is the lack of economic recovery. After a fall in GDP of 6% in 2008/09, the economy briefly recovered, but the recent double dip recession of 2012 has left the UK …
Readers Question: Would a devaluation help Greece? If you look at the Greek economy, their exchange rate has been effectively overvalued for several years. This overvalued exchange rate has caused Greek exports to be relatively uncompetitive and has caused various economics problems. Combined with efforts to tackle an unsustainable debt level, the over-valuation has contributed …
The purpose of harmonised competitive indicators is to show changes in relative competitiveness of countries. They are are also consistent with the real effective exchange rates (EERs) of the euro. This shows the divergence in competitiveness between a country like Germany De (improved competitiveness) and other countries like Greece and Ireland which have seen higher …
Readers Question: I read today that US owes an overall debt of 16 trillion, similarly India is also too worried about its fiscal deficit, I think that every country owes some debt. so if everyone owes some money, then where is that money coming from???, or in other words, if everyone’s account balance is in …