Holland - "Britain was right all along about the euro currency."
The euro is killing our economy, say Dutch
By Ambrose Evans-Pritchard (Filed: 01/06/2005)
The "boom-bust" effects of the single currency have driven the Netherlands into a severe economic downturn over the past four years, explaining the grim mood expected to cause so many Dutch voters to reject the EU constitution today.
Unemployment has jumped from 3.3pc in 2001 to an estimated 6.7pc this year, while the economy has been stuck in permanent slump after a sharp recession in 2003.
Despite the crisis, Dutch citizens remain one of the biggest net contributors to the EU budget.
Johan Verbruggen, head of Holland's Bureau of Economic Analysis, said the economy over-heated badly in the late 1990s, leading to a property boom and spiralling wage costs.
The Dutch central bank had no effective means of halting the boom under monetary union. Interest rates that are set by the European Central Bank for the whole eurozone were barely half Holland's 4.5pc inflation rate in the final phase of the spending spree, which invited reckless behaviour.
"The property market was really mad in the late-1990s. House prices went up at 11pc annually for nine years," he said.
"Then we had a lot of fun when the euro was very low. The Dutch economy is one of the most open in Europe, and so the exchange rate has a huge effect on us," he said.
"The result of the overheated labour market was that we lost 17pc in competitiveness against the rest of the euro area from 1997 to 2003. It's tough trying to get it back," he said.
Nout Wellink, Holland's central bank chief, admitted in a speech that "the Dutch economy has acquired a kind of boom-bust character".
The Dutch government has since imposed the one of harshest austerity packages of any OECD country in recent times, raising taxes, slashing benefits and clamping down on early retirement. Wages are in effect to be frozen for two years.
After tightening their belts to keep the deficit within the 3pc limit of the European Union's Stability and Growth Pact, the Dutch are enraged at the way France and Germany re-wrote the rules to suit themselves once they were in trouble.
Frits Bolkestein, former EU single market commissioner, told Dutch television last week that he now regretted giving up the guilder, the symbol of Dutch trading success. We should have stuck with our currency just like the British. They were right to stick to their currency. The British economy and the way they run it is an example to us all in Europe.
Joshua Livestro, a Dutch media commentator, said that ordinary voters linked their current troubles to the failures of EU economic policy, though their main focus was on price rises resulting from euro entry at an undervalued exchange rate - a fact that was known at the time but withheld from the public.
"People are not amused at having 10pc of their savings written off," he said.
Analysts say that the Netherlands has a far stronger economy than some of the "Club Med" states such as Portugal, Greece and Spain that have also been destabilised by the effects of monetary union, and will undoubtedly weather the current crisis.
thedailymail.co.uk
The euro is killing our economy, say Dutch
By Ambrose Evans-Pritchard (Filed: 01/06/2005)
The "boom-bust" effects of the single currency have driven the Netherlands into a severe economic downturn over the past four years, explaining the grim mood expected to cause so many Dutch voters to reject the EU constitution today.
Unemployment has jumped from 3.3pc in 2001 to an estimated 6.7pc this year, while the economy has been stuck in permanent slump after a sharp recession in 2003.
Despite the crisis, Dutch citizens remain one of the biggest net contributors to the EU budget.
Johan Verbruggen, head of Holland's Bureau of Economic Analysis, said the economy over-heated badly in the late 1990s, leading to a property boom and spiralling wage costs.
The Dutch central bank had no effective means of halting the boom under monetary union. Interest rates that are set by the European Central Bank for the whole eurozone were barely half Holland's 4.5pc inflation rate in the final phase of the spending spree, which invited reckless behaviour.
"The property market was really mad in the late-1990s. House prices went up at 11pc annually for nine years," he said.
"Then we had a lot of fun when the euro was very low. The Dutch economy is one of the most open in Europe, and so the exchange rate has a huge effect on us," he said.
"The result of the overheated labour market was that we lost 17pc in competitiveness against the rest of the euro area from 1997 to 2003. It's tough trying to get it back," he said.
Nout Wellink, Holland's central bank chief, admitted in a speech that "the Dutch economy has acquired a kind of boom-bust character".
The Dutch government has since imposed the one of harshest austerity packages of any OECD country in recent times, raising taxes, slashing benefits and clamping down on early retirement. Wages are in effect to be frozen for two years.
After tightening their belts to keep the deficit within the 3pc limit of the European Union's Stability and Growth Pact, the Dutch are enraged at the way France and Germany re-wrote the rules to suit themselves once they were in trouble.
Frits Bolkestein, former EU single market commissioner, told Dutch television last week that he now regretted giving up the guilder, the symbol of Dutch trading success. We should have stuck with our currency just like the British. They were right to stick to their currency. The British economy and the way they run it is an example to us all in Europe.
Joshua Livestro, a Dutch media commentator, said that ordinary voters linked their current troubles to the failures of EU economic policy, though their main focus was on price rises resulting from euro entry at an undervalued exchange rate - a fact that was known at the time but withheld from the public.
"People are not amused at having 10pc of their savings written off," he said.
Analysts say that the Netherlands has a far stronger economy than some of the "Club Med" states such as Portugal, Greece and Spain that have also been destabilised by the effects of monetary union, and will undoubtedly weather the current crisis.
thedailymail.co.uk
