Eurozone carnage: UK RIGHT to keep pound, Germany should have kept Mark – economist

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And Hans-Olaf Henkel believes the current situation suits just one country – Emmanuel Macron’s France. Meanwhile Mr Henkel said even before the recent coronavirus crisis, it was already obvious that the concept of a “one-size-fits-all” single currency was fundamentally flawed.

The pandemic has had a devastating economic, as well as health, impact across the bloc, with Spain’s economy shrinking by 18.5 percent in the period from April to June, having already dropped by 5.2 percent in the three months prior that.

France’s economy shrunk by 13.8 percent, Italy saw a fall of 12.4 percent, and even in Germany, the economic powerhouse of the EU, the fall was 10.1 percent.

Across the bloc as a whole, the average contraction was 11.9 percent.

Mr Henkel, who stood down from the European Parliament last year, told “The eurozone shows perfectly why it makes no sense to change economies to fit a common currency.

“On the contrary, a currency should rather fit the reality of a country’s economy.

“In other words: it was wise for Britain to keep the pound and it was foolish for Germany to give up its D-Mark.”

Mr Henkel said the impact of the pandemic was plain for all to see.

However, he stressed the roots of the problem preceded the onset of the disease.

He explained: “Of course the economic downturn of the eurozone cannot be a surprise to anyone.

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“However, even before the corona crisis, the eurozone lagged seriously behind not only the world but also those EU countries which are not in the eurozone.

“No wonder that countries like Denmark, the Czech Republic, Sweden and Poland have no appetite to join the common currency.

“This ‘one-size-fits-all’ currency actually fits only France.

“It is too weak for Germany and other Northern countries; it is too strong for the southern eurozone countries.

“The result? Italy, Spain and Greece lost their export markets while Germany’s balance of trade shot through the roof!”

Mr Henkel added: “The euro is like a shirt which is available only in one size.

“For some it is too tight; for other much too wide.

“As a result, Countries like Italy or Spain must lose weight to fit it, ie need a lot of reforms, while Germany’s productivity must go down which it has done for years.

“The euro fits France however perfectly; one reason why this country remains unwilling and unable to reform.

“If the euro is to survive it can only do so by all becoming like the French.”

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