Posts Tagged ‘ireland’
The eurozone crisis should be depressing anyone who even half-heartedly follows business news. The contagion is spreading rapidly, even core countries such as France and the Netherlands are seeing their debt yields rising. If Italy does go over the edge we can prepare ourselves for a full on depression.
So, here are three pieces of good news. They don’t outweigh the general doom and gloom surrounding the European (and by extension the world) economy, but they do provide glimmers of light at the end of the tunnel. Without further ado:
1) If the eurozone can survive the next year or two it will be in an excellent competitive position. According to a study from the Lisbon Council, a Brussels based think tank, reforms of the major European economies is much further along than the popular perception, and the economic and competitive convergence needed to successfully run a single currency are also taking place. They have harsh words for France, which appears to be reforming as little as the Germans but without their strong economy, but the PIIGS are said to be rapidly improving their situation.
2) Portugal is meeting its targets and Ireland’s GDP has started to grow again. Today the ‘troika’* announced that they were very satisfied with Portugals progress and that it was successfully meeting its targets under the bailout deal. Similarly Ireland’s GDP has grown in the last two quarters.
3) Italy has never defaulted on a debt in peace time. As this Telegraph article explains, Italy’s only debt default in its whole history was on debts owed to the Allies in 1940. I don’t much approve of people defaulting on debts they owe to us, but when we’re actually at war it’s probably excusable. This contrasts with France and the UK which defaulted in 1932 and 1933 respectively. Italian default is the greatest danger to the European economy, and so if you have reason to think they don’t do default it’s a reason to be more optimistic.
Realistically there are plenty of reasons to feel down about the European economy, and my own view is that it has a pretty negative outlook. But hey, writing this post at least made me feel better for a bit.
*The EU, ECB and IMF.