Euro blamed for rocketing cost of living
By Henry Samuel
01/01/2007
Telegraph
London
January 1, 2007
Less than half of citizens in the euro zone are happy with European monetary system five years to the day after it replaced the franc, the mark and other national currencies, and following a painful rise in the cost of living.
A growing number of Europeans believe that the biggest monetary revolution in history has done more harm than good to national economic growth, the job market and standards of living, recent opinion polls have indicated.
It is in France, Germany and Italy, the most enthusiastic advocates of the move to the euro, where some of the highest dissatisfaction rates were recorded.
A poll published last week in France showed that 52 per cent of the French thought the euro had been a "bad thing."
The main complaint is that the euro has led to a rise in prices – 81 per cent described price hikes as its worst failing, a poll published by the European Commission indicated.
According to the poll, Italy is the most unhappy, followed by Greece and the Netherlands. Ireland is the happiest.
In France, official statistics suggest that inflation is no higher than before the euro, hovering around 1.6-2.1 per cent yearly since 1999.
But press investigations have shown that these statistics are inaccurate when it comes to basic commodities. According to Le Parisien, which published its own comparative study, the price of 30 everyday items had shot up by 80 per cent in the past five years. A baguette cost 65 cents in 2002 and 80 in 2006 – up 23 per cent. A coffee in a cafe had rocketed 120 per cent, a kilogram of potatoes had gone up by 93 per cent and toothpaste by 84 per cent.
Dominique de Villepin, the prime minister, subsequently promised to create new, more representative price indicators in the fields of housing, energy, water and telephones.
The majority of French and Spanish want a return to dual pricing – with the national and European currencies side by side on price labels.
People were still finding it hard to get to grips with the real value of things, and as a result were spending less as a precautionary measure, said the study.
The European Commission insisted last week that there was a "certain erroneous perception" of inflation.
"Inflation rates for some countries have never been as low for as long," said Joaquim Almunia, the financial and monetary affairs commissioner.
Other advantages included better protection against currency fluctuation, a reduction in the cost of imported goods, a rise in exchange and investment within the Euro zone, thus reducing dependence on outside trade, and the practical benefits of using the same currency across the Union.
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A doomed currency based on symbolism
Telegraph - Leader
January 1, 2007
When the euro notes and coins were launched five years ago today, the question was who would be the next to join; now it is who will be the first to leave. Of the 15 EU members on January 1, 2002, it is the three that stayed out — Britain, Denmark and Sweden — that have prospered. The two Nordic nations have voted by handsome majorities to keep their currencies. In both countries, political leaders warned that a "No" vote would lead to a downturn; and in both countries, the "No" was in fact followed by a surge in the stock exchange, a fall in inflation and a drop in long-term interest rates. In Britain, public opinion is granite hard for sterling, to the extent that no serious politician proposes joining the EU currency, and the lobby group set up to campaign for it has folded.
Meanwhile, opinion within the euro zone has shifted. In France and Germany, majorities say they would rather have kept their old money. In Italy, some shops have started to accept lire again, to the delight of their customers. It may well turn out that membership of the euro has peaked at 13 with Slovenia's accession today. The scenic Alpine state, which joined the euro at midnight, is the goody-goody of the new intake, keen to adopt every harmonising measure. Perhaps its euro-enthusiasm owes something to the fact that, uniquely among the ex-Communist entrants, it has been run continuously by the old regime. Not that Slovenia's rulers are Marxists these days, of course; indeed, they never really were. Rather, they are managerialists, supreme technocrats who have taken naturally to the Brussels system.
Supporters of the currency are clutching at the news of Slovenia's membership, but there is a hollow and perfunctory tone to their jollity. Looking back, their mistake was to rely on mood and symbolism to sell the new currency. Unable to argue convincingly that the euro would make people better off – as, indeed, it has not, bringing slower growth and higher inflation to most participants – they instead concentrated on claiming that monetary union was inevitable. At first, their tactic worked. No one likes to be on the wrong side of history and, faced with a choice between progress or backwardness, most people swallowed their doubts about the enterprise.
But remove the sense of inevitability and the entire construct collapses. The optics of the Danish and Swedish referendums were especially telling in this regard. In both countries, the "Yes" campaigns were largely run by middle-aged, middle-class men, while the "No" sides were made up of pretty girls in tight T-shirts. Suddenly, it seems only a matter of time before states start withdrawing.
telegraph.co.uk
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