Wednesday, 30 January 2013
Greece: still in the Euro
Back in May last year, when informed opinion held that Greece was about to crash out of the Euro currency zone, I confidently predicted that Greece would stay in the Euro because I was sure that the EU would move Heaven and Earth to make it so. Eight months on and the EU chattering classes have moved on from economic troubles to the UK's membership, so I thought it might be worth pointing out that:
1) Greece is still in the Euro
2) Talk of Greek exit and Euro breakup has faded
3) William Hill paid out my £30 winnings on Jan 1st, cheers!
Still, it's not all good news. The euro area is still littered with problems, in many ways the more subtle structural problems that remain are going to be harder to solve than the urgent problems that filled the newspapers last summer. How exactly are Spain and Greece going to rebuild their economies and solve their 26% unemployment rate while still in the same currency as Germany and the Netherlands? It's not obvious how. Is France's Socialist government mad enough to drive Europe's 2nd biggest economy into the mire as well? Maybe. Certainly, they're giving it a go.
The current uneasy truce can't last for ever; historically, economic crises tend to come to a head if unemployment breaches 30%-ish levels, as angry citizens demand radical action from their governments. Greece and Spain are closing in on that, and the EU member states have never shown much inclination to get ahead of the economic problems by taking pre-emptive action, so I dare say that another crisis is around the corner. But they have confirmed what I always believed: when push comes to shove, they intend to do whatever it takes to keep the show on the road. If the Euro or the EU does eventually go down, it will go down fighting and leave behind an almighty mess.
Posted by Neil Garratt at 22:47