Europe tightens financial screw
THOSE attuned to the sounds coming out of Europe in recent days might easily ascribe to the view that "God is always on the side of the big battalions". On Wednesday, German Chancellor Angela Merkel went out of her way to dampen expectations of an interest rate cut on our bailout terms. Yesterday European Central Bank president Jean-Claude Trichet went one better, signalling ominously that rates are set to rise.
Speaking in Frankfurt, Mr Trichet seemed to imply that his hand is being forced by inflationary pressures. Decoded this means that the Germans and French are anxious to apply the handbrake as economic activity picks up apace. But in Ireland, where the engine has come to a shuddering halt, the introduction of further impediments to growth is bitter news indeed.
Mr Trichet spoke of the need for "strong vigilance", which is Eurospeak for trouble ahead. It was the favoured phrase employed by the ECB during its 2005-2007 rate hike cycle.