The Euro is Vulnerable
August 8, 2005 by Ken
Filed under The Best of the Rest
Commentators, have pointed out that the euro is a vulnerable currency because there is no government committed to a single decision-making authority. At a time of crisis one or more of the governments could decide the currency is no longer relevant.
So obviously there needs to be closer integration of the Euro states fiscal policies, this of course confirms Monnet`s idea that cooperation in one area will require closer cooperation in another and eventually the states will merge into one united block.
The Euro in Crisis report says unless EU-member states can agree a common taxation system and public spending policies, the future of the euro could be in doubt. It warns that slowing economic growth in the eurozone means member states should reduce public deficits rather than increase them.
The report says the 12 eurozone countries should centralise spending and taxation policy. Otherwise there was doubt whether the euro could survive.
Chief economist with Friends First Jim Power said success and survival of the euro depended on closer policies among EU nations. “You need a much more politically unified block. Fiscal policy needs to be more co-ordinated, and this will lead to a much closer union,” he said. “If the project is to survive in the long-term, we need central policies. To speak of the euro’s demise is exaggerating, but they must move to harmonisation.”
“If you have proper political union, every country should be viewed on individual merits. Ireland, which has a big requirement for capital spending, should be allowed to run deficits,” he said, adding that day-to-day spending on public services should be agreed among the 12 eurozone states.
In this way they will eventually for a United States of Europe.
