The budget deficit of the EU countries have skyrocketed due to the financial crisis in the air. While Germany has a comparatively modest budget deficit, the budget deficit is 12.7 percent of the Greeks confirmed BIPMaastricht-criticism by economists. How can the euro’s stability be maintained?

During the signing of the Maastricht Treaty (1992), 62 German economics professors signed a manifesto against the European Monetary Union. Six years later, joined more than 160 economics professors a call “The euro is coming too soon“. Both calls were picked up by the media and resulted in the wake of a heated public discussion. It comes to the pros and cons of the European Monetary Union.After initial weakness, the euro had shown some stability.

The average inflation rate in the euro area was moving normally close to the target rate of 2 percent. In addition, the yields on long-term government bonds to be approached by the risk premiums in the earlier weak-currency countries almost evaporated. It was a rapid gain in reputation of the European Central Bank.

These positive signals were registered very happy without considering, however, that parallel constructions also serious imbalances and instability in the euro zone. Therefore, has thereby changed the image. In addition, realize fatally in many ways exactly. Those risks faced by the Euro-sceptics have warned in their manifestos.

It was said in 1992, among other things, the economically weaker European partners are exposed to a common currency in increased competitive pressures, making them out because of their lower productivity and competitiveness, increasing unemployment. In this way, will be necessary high transfer payments in terms of a financial compensation.

In 1998 was warned that the Stability Pact could not ensure lasting fiscal discipline. Since sanctions do not automatically occur, there is scarcely a qualified majority for the application of the Covenant, if a larger number of countries simultaneously violated the deficit ceiling.

The Stability and Growth Pact was a farce fast. Instead, the years to high debt, such as Germany or France to occupy, with sanctions, the Stability and Growth Pact “adjusted” by now officially more than opportunities and longer adjustment periods are admitted to exceeding the deficit criteria.


no comment untill now

Sorry, comments closed.