Eurozone growing ever more fragile
Published 07/05/2011 | 05:00
THE EU united last night in its denials of reports that Greece was preparing to leave the eurozone. These ranged from the EU Commission to the German government to the Greek finance ministry itself. Other governments across the 17-member currency union were also prepared to dismiss the report.
Yet the mere hint of such a move was enough to push the single currency down almost 1.5pc -- its biggest drop against the dollar in a year. The report, carried in the German magazine 'Der Spiegel', suggested the Greeks were looking to leave the euro because their debts had become unsustainable.
The fact that a leading and reputable German news magazine could suggest such an eventuality simply highlights just how fragile the eurozone has become. It also highlights just how inadequate the European response has been to this economic crisis which began in January 2010. The European approach has been to place a sticking plaster over the problem -- and heavily indebted countries have simply been asked to pile up even more debt.