The euro has been in turmoil, on and off, for two years. We have become accustomed to doom-saying headlines, citing bond yields and sovereign debt, interest rates and double-dip recessions. At the beginning of these multiple crises, Europe was united. ‘Merkozy’ – the unfortunate Merkel-Sarkozy duo – expressed oodles of solidarity. Austerity was imposed – the banks took no notice.
The situation yo-yoed for some time. There were bail-outs in Ireland and Portugal – and multiple ones for Greece. We saw Italy loose it’s elected (if sleazy) government, which – along with Greece’s – was replaced with technocrats. In Spain a right-wing government came to power. Cuts in public spending became the order of the day.
But then things began to change. In Greece and Spain, people began to protest against the austerity programs enforced by Germany in return for cheap money. Anti-Europe sentiment has risen, as the solution has become more and more about integration. In Greece’s recent elections, no party won enough seats to form a government – but those who did well were those who pledged to renegotiate the terms of the bail-out agreement, and a neo-Nazi party did scarily well. A new election is now scheduled for mid-June, and the markets remain jumpy. Many hope that Greeks have now expressed their anger and will vote for pro-bail-out parties, but this is not guaranteed.
Meanwhile, in France Mr Sarkozy lost power to Francois Hollande – a Socialist. He was inaugurated with a promise for growth. He intends to achieve this by instigating a ‘growth pact’ to run alongside the euro-zone’s fiscal compact, comprising of measures to boost output and create jobs. The two agreements, on the face of it, will have to contradict each other. I feel inclined to explain the concept of aggregate demand here, but I’d be terrible at doing so and it would be very dull. Suffice to say, boosting output while keeping one’s fiscal situation on the right path is a tough call. Growth is needed to rectify the deficit, but more spending is needed if we are to grow. I can only wish Mr Hollande luck, especially as Mrs Merkel remains stone-faced and intransigent. With the Merkozy partnership gone, it will indeed be interesting to see what happens. A disagreement between Germany and France, who have so far acted together as Europe’s bank, could be what really ends the era of the single currency.
Along with all the hoo-haing in Europe, we in the UK have been subjected to David Cameron. Let’s ignore the shenanigans about the Levison Enquiry (it really is about time that ended) and the pasty tax. What has really got up my nose recently is the PM’s insistence that the UK is somehow not in Europe. And as ridiculous as that is, it is only symptomatic of a wider feeling prevalent in a majority of the public that ‘we’ do not belong to the Continent. I mean, come on – if we are not European, what in God’s name are we? It is about time that the British accepted that we are not important enough anymore to do without belonging somewhere. The Channel is a paltry fifty-odd miles wide – it hardly constitutes an ocean.
Now I’ve expressed my Europhillic views, I’ll sign off to go and check the euro is still in one piece. I have a feeling that its days are numbered and its impossible to tell if the final moments are indeed upon us or if the politicians have put off the day of reckoning a bit longer.