Sunday, April 17, 2005

The Euro



The implications of the persistent lead in the opinion polls of the 'no' to the constitution in France (first signs of which reported here) are starting to sink in even on Wall Street. The FT's Lex has this on Saturday:
Ironically, the French referendum on the EU constitution may be of more importance for sterling than the UK election.
France Inter has been playing music instead of its normal coverage for much of the last week, due to industrial action, through this crucial period (Chirac's TV debate, for example), but they had Charles Pasqua on  Friday morning. All the woes of the EU economy, apparently, are down to the European Central Bank and its exclusive focus on inflation. And this is the argument of an opponent of the constitution on the 'Right'. The Euro is said to be 30% over-valued against the US dollar (how can the dollar be under-valued when the US has such a large trade deficit. The truth is that both are over-valued against the Chinese renminbi). Not that France should withdraw from the Euro, just that the ECB should be brought under political control.

All of which makes it seem strange that debate on Europe has hardly featured in the British election. I know that it is supposed to have been neutralized by the UK referendum, which we are told will still be held in 2006 whatever the outcome in France or elsewhere, but if the French do vote 'no' and the constitution process collapses, according to a BBC analysis there may be an attempt to salvage some of its elements, such as having an EU Foreign Minister.

See also The Economist's 'Can the constitution be saved?' and 'Related Articles'.

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Heard a little bit of Nicola Sturgeon (the SNP's leader at Westminster) on BBC's Today on Friday. Must say she sounds more sensible than that clown Salmond.

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