Thursday, 3 June 2010

Who'd be a Euro-Millionaire?

It would appear that I may have jumped to conclusions in my last post that related to the Hung Parliament. The new administration seems to me making a good fist of things so far, reminding us at all available opportunity that the deficit reduction is central to their objectives.

And so it should be. The note from the Departing Chief Treasury Secretary to his replacement in which he stated that the money had run out was widely seen as a joke. I am afraid I must have had a sense-of-humour-bypass operation, because I see it as many things, but most definitely not funny. In a sense though the note says more than a thousand press releases by the new incumbents ever could, as it removes any legitimacy from any economic argument that our new opposition might dare to make, showing as it does their signal failure and their conscious squandering of our reserves. It was reassuring too to hear the Bank of England Governor’s supporting comments with regard to attacking the deficit now as opposed to waiting in the forlorn hope of there ever being a better or less painful time.

On the whole I am very impressed with the way that things have gone in the month or so since the General Election. It was a shame to see David Laws depart from the Treasury team, not only for the personal trials that the whole affair must have brought him but also as he appeared to have a lot to offer his department and the country as a whole. Let’s hope that the coalition manages to bring back its stronger players from the dead in the same way that we saw the continual resurrection of Peter Mandelson!

The fragility of the Euro following Greece’s near bankruptcy and the ensuing speculation over the other ‘PIIGS’ is difficult to fathom. Many commentators are predicting the eventual failure of the single currency altogether as a result of the tensions this episode and others like it create. It seems hard to believe that the Euro would be allowed to fail, given the amount of political capital that has been invested into it over the years, particularly the primary players in France and Germany. However, there seems to be growing weariness within Germany that they have bank-rolled the profligate South for too long and if German leaders are faced with quietly putting the Euro out of its misery or losing power in their own country the choice will not be a difficult one.

The alternative is that the Euro continues to soldier on, but that Germany installs ‘Economic Advisers’ in each of the member states as a way of ‘Federalising’ the economic policy Euro-wide so as to be a clone of what is done back home. This would of course work in pure economic terms, but would cause untold pain and anguish as the ‘German Way’ proved far too hard a road for the states who have always taken a more relaxed approach to their finances. As we know, it is that relaxed approach that has got them, and now the single currency, into such hot water, but that doesn’t mean they will see it that way.

Whatever, we have interesting times ahead, both here in the UK and on the wider stage too. I like to think that the current negativity might be coming to an end. However, even if it does, it will only be a temporary relief, as the only thing predictable about the future remains its unpredictability.

Now where did I leave those old Peseta notes and coin I wonder?

No comments:

Post a Comment