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French mutiny brewing against the euro
 Posted on the off-chance that France still matters. And yes, I know it's a duplicate.French exports slumped in October and the country's car industry slid deeper into crisis, heightening fears that France is buckling under the strain of the super-strong euro. The monthly trade deficit ballooned to $2.7bn, following two months of sliding industrial orders and a shock halt to economic growth in the third quarter. Car output is down 14pc so far this year. French trade minister Christine Lagarde blamed the grim trade figures on the tight policies of the European Central Bank, which has raised interest rates six times in a year to 3.5pc. The rate rises are the key factor pushing up the euro. "We sold one less Airbus, we haven't sold any satellites, and we have not sold any ships. Frankly, the battle against inflation has been won. It's high time the ECB began thinking about growth," she said. Selling one less Airbus might be a blessing. Her comments came as French leaders of all stripes stepped up attacks on the bank, accusing it of "monetary masochism". The euro has risen 11pc against the US dollar and most Asian currencies this year, and 20pc against the Japanese yen. American exporters thank you. French premier Dominique de Villepin
Ségolène Royal, socialist candidate for the presidential elections in May, went even further, accusing the ECB's president Jean-Claude Trichet of usurping democratic authority. "It's not for Mr Trichet to dictate the future of our economies: it's a matter for our leaders chosen by the people. We must completely change the charter of the central bank," she said. Why not just bring back the franc? ECB governor Guy Quaden said there was no reason for states to "panic" about the currency level. "The euro is relatively high but we are not in uncharted waters. It's striking how one hears these complaints during presidential campaigns," he said. However, critics say the landscape has changed beyond recognition since the last bout of European currency strength in the early 1990s. Italy has lost 40pc in competitiveness against Germany since the exchange rates were fixed ten years ago, while France last lost over 20pc - yet they still have to compete in the same currency zone. Which they agreed to. Rather hard to feel any sympathy. Germany is re-emerging as a Teutonic Tiger with exploding exports to China, Eastern Europe, and the Middle East, while Europe's 'Club Med' bloc are steadily losing share of world markets. Fiat sales have been rather flat in the U.S. this last decade -- stuck on zero. Derek Scott, Tony Blair's former economic adviser, said the euro system was becoming unworkable as the one-size-fits-all monetary policy drove countries further apart. "The ECB faces an impossible task because there is no such thing as Euroland: there are groups of countries going different ways," he said. "Germany has clawed back competitivenes by squeezing its economy, but Italy, France, Spain and others have been enjoying property booms. Boom goes bust," he said. The Euros can't work together? Whoda thunk? "In the end, the ECB may to have to respond to the needs of the weakest economies, or monetary union will fall apart," he said. Philippe de Villiers, leader of the eurosceptic MPF movement, said he was launching a referendum drive for a return to the franc. "The euro is a failure. It's weakening our industry and our exports to the point where Airbus is preparing to build plant directly in the United States and China," he said. "As we saw with the Czech and Slovak currency split, leaving the euro is technically quite simple. We could do it in eight days," he said. And bring back the Lira -- I miss all those zeros. Posted by: Steve White 2006-12-14 |
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