One of the German Social Democrat opposition leaders, Frank-Walter Steinmeier, also told the Bundestag that the summit had been a failure. “The fiscal pact is only an illusory giant ”” from far away it looks very big but if you come close, the breakthrough is really very small,” he said. “We used to have a debt crisis but after the summit we added a veritable constitutional crisis. What we have now is more instability and a further complicated structure in Europe.”Adding to signs of the economic damage, the respected Ifo Institute cut its forecast for German growth in 2012 by half to 0.4 per cent and warned Europe’s biggest economy could slide into recession if the debt turmoil is not quelled.
In theory the incipient rescue plan is supported by 26 European nations, with Britain the only exception. But other countries outside the eurozone have also cast doubts, saying they do not yet know if they can fully sign up. Earlier this week Petr Necas, the Prime Minister of the Czech Republic, said that the deal was “not much more than a blank sheet of paper”.
Michael Noonan, Ireland’s Finance Minister, said on a visit to London yesterday that Ireland may need to hold a referendum on the EU treaty, pointing to barriers within the euro area itself.
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I am not prepared to pay Mr Murdoch a quid to read this.
The headline is misleading and conflates two things:
The Euro fell yesterday, because after all the hype, everyone realised that the Franco-Prussian alliance plans for developing a super-state were not doing anything to deal with the debt, deficit and exchange rate problems of the PIGS economies. In fact, it was worse than that, the Euro summit last week was an excercise in denial. I listened to the opposition treasury spokesman, Ed Balls, admit the same yesterday, notwithstanding the parliamentary opportunism of his boss Milliband.
Now yesterday, Chancellor Merkel asserted her independence of Merkozy by making it clear that Sarky was misleading people by saying that Britain was out of Europe, by pointing out as Cameron has, that the existing treaties continue, with Britain making its contribution to all areas of Euro-life as usual. However it is interesting listening to the bile pouring forth from Brussels where the kleptocracy recognise clearly the threat to themselves and their boorish and expensive privileged status bossing the rest of us about.
Meanwhile interestingly, a number of countries are going a bit cooler on the Merkozy plan – after the party they have had to go back to their countries and their parliaments to explain how they agreed to pass powers to Brussels to vet their budgets, tax their citizens and hand over their independence.
But the basic problem is nothing is being done about the problems of the Euro and that is why confidence is dropping. However, a lower Euro will be to the competitive advantage of the PIGS economies who will be marginaly more viable today in trade and tourism.