Despite the sovereign debt woes of some countries in the eurozone, the euro currency itself has stood up strongly (surprising so to many) in currency markets, particularly against the dollar. That rate has changed in recent weeks, in favor of the dollar: the euro has now depreciated by nearly 10 percent against the dollar. The falling euro's international value could make European exports more competitive globally, particularly those of Germany and Italy. The euro has been "devalued" slightly in currency markets as (1) the U.S. economy has shown signs of revival and as (2) the European Central Bank's policy of maintaining very low interest rates under the bank's new head, Mario Draghi. If it lasts for six months, a euro "devaluation" of this sort could add a point economic growth in some eurozone countries (and also make existing loans a little cheaper to pay off), analysts say. That, in turn, could spare the EU as a whole from sinking back into recession and facilitate the reform process in troubled eurozone economies such as convalescent Italy.
The outcome of the Brussels summit on December 8th and 9th is a disaster for the UK and also threatens the integrity of the single market, says a well-reported article by Charles Grant, head of the Centre for European Reform, a European-minded but independent think-tank in London.
The most significant result so far in the crucial euro summit has been British Prime Minister David Cameron’s decision to opt out of a proposed agreement on national budgets that would have involved some forfeit of national sovereignty. The plan is aimed at restoring future credibility to the euro and, although Britain never adopted the euro and is therefore not in the eurozone, the proposal was desigend to cover all EU member states.
The fate of the euro and all it implies seems to be at stake in the EU leaders' summit meeting opening Friday. A successful meeting -- meaning one that advances the agenda to create supranational oversight of member states’ budgets -- will keep alive prospects for a reversal of recent market trends and a revival of credibility for the euro.
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