‘The threat to the euro is over’: EU chief Barroso claims single currency will not implode

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The head of the European Commission provoked scorn last night by claiming the euro was out of the danger zone.
Despite the economic slump across the region, Jose Manuel Barroso said the single currency was no longer at risk of collapse.
‘I think we can say that the existential threat against the euro has essentially been overcome,’ he told a conference in his native Portugal. ‘In 2013, the question won’t be if the euro will or will not implode.’

However, Neil Mellor, a currency expert at Bank of New York Mellon, said Mr Barroso was ‘simply not in a position to make such predictions’.
He added: ‘2013 will be a tougher year than 2012 for Germany and by extension, the euro area as a whole. The crisis is most certainly not over.’
David Buik, an analyst at City spread-betting firm Cantor Index, said: ‘With the level of austerity that must be implemented, there can be no growth in Mediterranean countries or, for that matter, France for years to come.

‘The day of reckoning will come and many of these economies will be staring in to the economic and financial abyss. The crisis is far from over.’
And Louise Cooper, a leading financial analyst, said: ‘Of course Mr Barroso is going to talk up the survival of the euro as he is the EC president.
‘In every financial crises going back to the beginning of time, politicians lie to us. They almost have to.

‘It is their job to pretend that the situation is better than it is in order that they do not make the situation worse by talking it down.
‘But that does not mean that we need to believe what they say.’ The eurozone has enjoyed a period of relative calm since Mario Draghi, the head of the European Central Bank, pledged to do whatever it took to save the currency – and in particular stand behind the debts of cash-strapped governments such as Spain.
It has boosted confidence in the euro and few analysts are now predicting a break-up of the single currency this year.

But it is feared the region is in for further hardship as unemployment soars and recessions deepen – stoking public anger amid mounting opposition to the flawed currency union.
The crisis will play a central role in crucial elections in Germany and Italy – the biggest and third biggest economies in the eurozone. In her New Year message, German chancellor Angela Merkel last week warned that 2013 will be a tough year for Germany and the eurozone.
‘The crisis is far from over,’ she said. ‘The economic environment will not in fact be easier but rather more difficult next year.’
The latest forecasts from the Organisation for Economic Cooperation and Development, a leading global financial watchdog, suggest the German economy will grow by a paltry 0.6 per cent this year.
The French economy is set to grow by just 0.3 per cent, according to the OECD, while a further year of recession is expected in Italy and Spain.
Unemployment is over 25 per cent in Spain and Greece and more than half of all youngsters there who want to work cannot find a job.
French unemployment has soared to its highest level since the country adopted the euro – piling pressure on socialist president Francois Hollande.
The Economist, the highly-respected financial magazine, recently warned that France is ‘the time-bomb at the heart of Europe’ – sparking fury in Paris. The eurozone crisis has been brewing since late 2009 before exploding to life in 2010.
So far it has led to a change of government among eight of the 17 single currency zone member states.
Asked about Mr Barroso’s latest comments yesterday, UKIP leader Nigel Farage said Mr Draghi’s pledge to prop up the euro ‘had temporarily diverted the markets’ attention’ but added that ‘fundamentally nothing has changed’. He said: ‘There are still massive economic flaws which will take more than words to cure.’
Erik Britton, a director at financial experts Fathom Consulting, said Mr Barroso was ‘not right and it’s not over’.
He said: ‘It’s been pronounced over many times over the last few years, incorrectly, and this is just the latest such pronouncement.
‘It’s not dead, though it’s been lulled to sleep by the soothing melodies issuing from the ECB and elsewhere.
‘But there is always a risk it will wake up again – some shock like a bank failure, or another Greek default, or a surprise result in the Italian or German elections, or something like that.’

From: http://www.dailym

ail.co.uk 08/01/2013

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