The Eurozone's worst nightmares may be about to become a reality. With the whole area facing a very tough 2013 and probably a not much better 2014, voters are becoming increasingly angry at their governments. Greece may be temporarily under control. Spain is still struggling with the situation made worse by high level corruption charges. France has just had to scrap virtually all of Hollande's economic promises under pressure from the real world and now the Italian election seems to have produced a situation in which any chance of forming a government, let alone a stable one, will be very difficult.
Measures to reform domestic markets, labour structures and to boost competitiveness in an attempt to restore the economic situation through internal devaluation,- especially in the Club Med group of Italy,Spain Portugal, Greece and Cyprus which Hollande foolishly decided to lead last yea,- are simply not working. Added to that is the Euro's consistently high value against the dollar and sterling over the past few months, hitting exports. In addition the EU now expects overall Eurozone growth to fall by 0.3% against a 0.1% decline last November. Germany, where Mrs Merkel faces a general election in early autumn is still faring better but there are considerable doubts whether France will maintain its course as anger against even further austerity deepens.
Last week the Bundesbank warned Paris that any backsliding on the new budget targgets set two weeks ago by the EU Commission will threaten confidence in the Eurozone's fiscal discipline. Germany is well aware that the French government has been pushing for softer targets in an increasingly vocal manner since last September and remembers that in the middle of the last decade both countries ignored EU defecit rules to their own benefit. Germany is unlikely to do that this time around but they are worried that France may still push for more breathing space. French commentators are also now concerned that there is a new axis between the Germany... and the UK leading those northern EU and Eurozone countriies to be much tougher on expenditure.
-Humphrey Hudson.
Measures to reform domestic markets, labour structures and to boost competitiveness in an attempt to restore the economic situation through internal devaluation,- especially in the Club Med group of Italy,Spain Portugal, Greece and Cyprus which Hollande foolishly decided to lead last yea,- are simply not working. Added to that is the Euro's consistently high value against the dollar and sterling over the past few months, hitting exports. In addition the EU now expects overall Eurozone growth to fall by 0.3% against a 0.1% decline last November. Germany, where Mrs Merkel faces a general election in early autumn is still faring better but there are considerable doubts whether France will maintain its course as anger against even further austerity deepens.
Last week the Bundesbank warned Paris that any backsliding on the new budget targgets set two weeks ago by the EU Commission will threaten confidence in the Eurozone's fiscal discipline. Germany is well aware that the French government has been pushing for softer targets in an increasingly vocal manner since last September and remembers that in the middle of the last decade both countries ignored EU defecit rules to their own benefit. Germany is unlikely to do that this time around but they are worried that France may still push for more breathing space. French commentators are also now concerned that there is a new axis between the Germany... and the UK leading those northern EU and Eurozone countriies to be much tougher on expenditure.
-Humphrey Hudson.
