Readers Question: With talk of a Greek exit from the Euro, the situation is almost always compared to Argentina in the 1980s and 90s. Can you explain what happened there and how it was resolved. In the 1980s, Argentina built up substantial debt and also suffered from periods of very high inflation. To stabilise inflation, …
Spain national debt was € 734,961 at the end of 2011 or 68% of GDP. This is a graph showing Spanish national debt in past 15 years. source: ECB stats By European and international standards, this is actually quite low. National debt in Italy is 120% of GDP. In France government debt is higher at 80% …
In 2012, the Pound has strengthened against the Euro – reaching a level not seen since 2008. However, the value of the Euro to Pound is still less than the peak of late 2007, when £1 reached €1.4. In June 14th, 2012 £1 = €1.24 Euros. An increase since the start of the year when …
One thing I really struggle to understand at the moment is why any country would want to join the Euro. The experience of the past few years is that membership of the Euro can devastate your economy. Given a chance, half of the members of the Euro would wish they had never joined. Greece, Spain, …
Suppose, the Eurozone stumbles through this crisis. Suppose countries avoid leaving the Euro and endure several years of low growth and internal devaluation? What is to stop another Eurozone crisis occurring in 5 – 10 years time? I can’t see how Greece, Spain and Portugal will ever be able to thrive in the Eurozone. Unless …
Since coming to power, the Conservatives have made reducing the UK’s record peace time deficit a high priority. It has been argued that drastic action was necessary to avoid the UK’s debt becoming unmanageable. David Cameron argues without rapid spending cuts, the UK could be facing rising interest rates and the prospect of debt default, …
Readers Question: Why is the current recession in Europe so bad? The recession in the Eurozone is one of the deepest recessions on record. For example, Greece are expecting 2013 to be the sixth consecutive year in recession (with on and off quarters of recovery)- this is one of the longest recession on record. Output …
Readers Question: There just seems to be many paradoxical actions taking place in markets and economies at the moment. How do we explain? Paradoxes of UK economy Low interest rates have not increased spending / economic growth Despite recession, inflation has been above target. Despite recession and depreciation of Pound, current account deficit increased in …