Solving the Euro Crisis

The meeting of leaders of European Economic Community went ahead last Thursday night, 26 countries joining forces to tackle the problem and the United Kingdom, or Mr David Cameron, decided to stand on the sidelines.  Does this, therefore, mean that the Euro is going to survive or is it heading for its demise; particularly as the rumours in the British press is suggesting that the German government is printing Deutsche Marks as a precaution.

In my opinion, the Euro can survive and is likely to become stronger as a result of the current crisis.  However, to make this happen, the 26 countries need to explore some policy changes alongside harmonising taxation and regulation of the finance industry.  In the main, for the benefit of all the Eurozone countries, the Euro needs to be devalued by 10%.  There is likely to be some disadvantages of taking this approach, but the benefits will be much greater, and far outweigh the disadvantages.

The advantages of devaluing the Euro will benefit all the 17 Eurozone countries and also the remaining 9 or 10 if the United Kingdom decides to join the club.  It will help enhance growth by making it easier to export goods produced in the Eurozone as it will be cheaper for none Eurozone countries to import these goods.  It may increase the cost of imports but if played well home produced goods will become more attractive to consumers.  It will also be enjoyed by local and Eurozone consumers.  Therefore, growth will increase further adding to GDP.  More demand will create more jobs, and more people working will increase tax revenue.  There has been a decline in industries producing white goods in Europe, this can be rectified and these goods can be rolled out locally at a competitive price.  Europe will once again take pride of place in the world markets.

France and Germany has already got an industrial base and so has some of the newer countries that have joined the European Economic Community.  Some countries have allowed there industries to collapse; it will be an opportunity to redevelop them.  The Eurozone governments can also harmonise corporation tax to enable varied and appropriate industries develop in all areas of the Eurozone and European Economic Community as long as they all co operate to make this work.  The corporation tax can also be tailored to be competitive with other industrial nations.  The Eurozone countries should also assist poorer former dependencies to participate with them in making this plan work.  They can create additional jobs is these former dependencies and also agree favourable trade deals.

The world as a whole will benefit.  However, we need someone to have sufficient courage and conviction to make this happen.  Someone to be prepared to take the risk and have the authority and wherewithal to make it happen.  It can work and will work; action speaks louder than words.  Meetings on their own are not going to solve the problem, action will.  Let's hope somebody is brave enough to take the steering wheel and guide this train in the right direction.  ACTION is needed now not next year or the year after, if we do not want to look back at at the next ten years as a lost decade.

Good Luck and Good Bye until the next time.

Knight Owl