Tag: eurozone

The European Central Bank kept euro zone interest rates at 1.0% on 2 July, bolstering expectations they will stay there well into next year, and said it would start buying bonds next week.

Economists from Central and Eastern European countries have broadly rejected the idea, aired by the IMF yesterday (6 April), of scrapping national currencies in favour of the euro as a quick response to the global economic recession, according to a roundup by the EurActiv network.

Europe's Nordic states yesterday (26 February) debated in Iceland whether to keep their own currencies or seek shelter from the global crisis in the euro zone.

Challenged by members of the EU's national parliaments gathered in Brussels yesterday (17 February), the bloc's leaders resorted to defensive rhetoric when asked to explain the modest scope of the Union's anti-crisis measures.

EU leaders will meet in Brussels on 7 November to hammer out a common EU contribution to the G20 summit scheduled a week later in Washington to address the financial crisis and its effects on the world economy.

Despite strong business confidence throughout the eurozone, "a closer look reveals a less rosy picture" of European economies, says Simon Tilford of the Centre for European Reform in an April blog post. 

The euro will have an increasingly stronger role to play in global markets because the dollar's difficulties are long-term, predicts David Cobham, an economics professor at Heriot-Watt University in Edinburgh, in an interview with EurActiv Slovakia.

Close examination of the inflation and output performance of eurozone member states reveals "inherent problems" with the euro that could threaten its long-term existence, claims Mike Wickens of the University of York in a June 2007 paper for EuroIntelligence.

During his first visit to Brussels, French President Nicolas Sarkozy said that he would refuse to "sell off" the interests of French agriculture in WTO negotiations and announced future proposals to revise eurozone governance.

Concerning opinions expressed about the European Central Bank (ECB) by newly elected French President Nicolas Sarkozy, Paul de Grauwe, professor at Leuven University, warns that such criticism could endanger the monetary union, in an interview with EurActiv.

A poll carried out by the Financial Times shows that more than two-thirds of French, Italians, Spanish and half of Germans believe that the single currency has had a ‘negative impact’.

Heads of state and government agreed at the March 2005 Summit to revise the EU's Stability and Growth Pact reform. Under the revised rules, member states must still keep their public deficits under a 3% GDP/deficit ratio and their debts under a 60% GDP/debt ratio. 

However, the pact's rules have been made more 'flexible' across a range of areas. For example, member states will avoid an excessive deficit procedure (EDP) if they experience any negative growth at all (previously -2%), can draw on more "relevant factors" to avoid an EDP and will have longer deadlines if they do move into an EDP.

Two economics professors challenge the "flawed" and "senseless" inflation criterion of the Maastricht criteria for euro zone membership.

Willingness to "get into shape" should be a key condition for euro zone applicant states to meet, and the Commission should single out the problem countries, argues a Brussels-based think tank.

Their economic growth may be spectacular, but even with their rates of inflation above the EU's ceiling, the Baltic states still believe that they are prepared to enter the euro zone.

Slovenians are set to adopt the euro on 1 January 2007 as their country has already met the criteria to join the eurozone. Delays are likely in Estonia and Latvia.

Economic and Monetary Affairs Commissioner Joaquín Almunia says that on average 75% of people in the newest member states are afraid of price abuses during the changeover to the euro.

Eurozone economies are set to grow by 1.9% in 2006, says the Commission. But will it be enough to help EU countries meet the rules of the reformed Stability and Growth Pact?

The Commission will be "very strict" when assessing the criteria for countries joining the eurozone, says Economic and Monetary Affairs Commissioner Joaquin Almunia.

The UK is set to exceed the Stability and Growth Pact's deficit ceiling in 2004-05. The Commission is due to receive debt and deficit figures on 1 September with Eurostat publishing the data in late September.

According to the Ifo business climate index, German business confidence is still riding high. But with consumer confidence low, some economists doubt the wisdom of the opposition's proposed VAT increase.

The former UK finance minister Ken Clarke, who is likely to run in the upcoming Conservative party's leadership contest, is doubtful Britain would join the eurozone for at least ten years.

Persistent growth differences in the eurozone can be reduced by a tough implementation of the Stability and Growth Pact, further integration of product, labour and capital markets plus measures to improve competitiveness, says the Commission.

Germany is projecting a deficit/GDP ratio over the 3% limit until 2007 and is set to follow recent black sheep Italy and Portugal into an excessive deficit procedure this autumn.