last February, a German study put the fire to the powder. She claimed that the euro had “cost” 56.000 euros for each French between 1999 and 2017. Experts and economists enthusiasts of all edges were then écharpés for several days, the defenders of the euro, putting into question the methodology of its critics who find therein a specific amount – which is determined by a think-tank pro euro – to encrypt the tragedy of the common currency. Strangely, few people were back on the recommendation of the report concerning France: “make structural reforms to finally take advantage of the euro”. A deposit as much as an admission of failure: as such, France would not have “taken advantage” of its new currency. Beyond ideological debates, the euro, without a doubt, the greatest economic decision of the last few decades, has he profited or cost to France? Without uchronie, and especially without ideology, return of contrasts on twenty years of the common currency.
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The euro was 20 years ago – Look on Figaro Live
Inflation and low interest rate
To the Bank of France, and governor François Villeroy de Galhau, no controversy: the euro is a “success”. At the european elections approach, the administrator has paid tribute to the single currency by stating that she has “helped to protect the purchasing power of French”. How? Mainly in containing the price rise. According to the Bank of France, the inflation would have been reduced by 3.7% in average by the adoption of the euro. On the graph, the curve is that of inflation in the euro area overall, and the data in blue relate to France:
Banque de France
The European central Bank continues in effect for many years an inflation target reduced. A good point for the euro is, thus, even if regarding the rising prices, there are still many French people who question the official statistics by comparing them to their experiences and, in particular, to the growing challenges relating to housing, fuel, etc Of the fears are “irrational” for the government and many economists, who say that the purchasing power is on the rise since 2013. Some return to the spending constraints that have significantly increased (15% in 1960, 34% in 2017). Other hand simply concerned the calculation of the inflation by Insee, even if the institute are advocates of the reduce.
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In connection with inflation, interest rates remained generally low or even very low since the changeover to the single currency. A factor that may benefit some economic actors and penalize other: if individuals were able to borrow and invest, or become owners of real estate for a cost that is more reasonable, investors have seen their investment income shrink drastically.
Banque de France
In regards to France, the low interest rates have, of course, allowed households to become owner of their housing, despite the acceleration of real estate prices (this last being in part due to the influx of foreigners, including in Paris). But they have allowed the State to save on the burden of the public debt, consisting of borrowings at very low rate or even negative. For 2020, Bercy would save ten billion euros, according to estimates of the Bank of France, $ 32.5 billion instead of 44.7 billion. Manna, which also corresponds to the totality of the gestures towards the “yellow vests”. But it is also a very dangerous situation: if the economy evolves, the rate goes back to protect the economy, the State could see its debt quickly become very difficult to sustain.
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economic Opportunities, or trade deficit?
One of the major changes brought about by the euro on the French economy was to give him access to an international currency, designed to encourage trade within the european Community and help businesses to export to the world. On this point, the site of administration, Public Life, points out that the single currency reduces the transaction costs of currency exchange only for transactions outside the euro area, and therefore limits considerably the costs of hedging against the foreign exchange risk”. A financial advantage, and beyond, a common language for doing business. On this point, many countries have benefited from this technical advantage of the currency scale, to the image of Germany, which began at the turn of the 2000s, after the reunification, “digested”, a rising power thanks to its industry performance. The eurozone is broadly in trade surplus (345 billion euros in 2018).
trade Balances of France and Germany, 1991-2011. Fondation Robert Schuman
The problem for France is that, on the contrary, the last two decades have been marked by a chronic trade deficit, which has gone worsen. More broadly, the de-industrialisation of the country has been violent, with -27,2% of employment in the manufacturing sector between 2000 and 2018. A failure solely due to the euro? Nothing is more discussed by the “pro” and “anti” euro, and yet their arguments are not contradictory. The supporters of the single currency have often pointed out it is rather to be found in the absence of structural reforms since the turn of the millennium, and in our competitiveness low, the reasons for our difficulties to export. It is clear that the French tax doesn’t really play in favor of its businesses… The assailants of the euro emphasize on their side, the steady rise of the currency, rather based on the model stable and strong of the Deutsche Mark as the swiss franc, which has penalised French companies exporting throughout the last two decades.
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The economic crisis of 2008: save the euro or Europe?
apart from its effect in the medium term, what role the euro has played during the financial shock and economic of 2008 and in the years that followed? For the site’s Public Life, “the euro has certainly cushioned the effects of the 2008 economic crisis by avoiding to the member States a series of devaluations. It is considered that in this situation, the european central Bank, guaranteeing the debt of the States, has managed to avoid a capital flight. The country europeans who had not adopted the euro seem to have suffered more than others from the crisis”. A country of the euro area can, however, testify to a certain “suffering” during the crisis: Greece, fell in a hell of economic from of the austerity plans driven by the powers of the euro zone, against a support face of the financial markets. Again, the national policy of course has its share of responsibility. But for the economist Marc Scitivaux, interviewed in 2011 on the aid plans, a devaluation would have been less painful, the plan of assistance having rather the objective of ensuring the stability of the euro area. “It is not to save the Greeks. It’s about saving the euro until the last Greek living” before nappa landed it then.
Reform or deadlock?
And for the next twenty years? Obviously, there are as many solutions as diagnostics. If the pro-euro meet that France must do more to influence the decisions of the european central Bank, make the effort and sacrifice this must be, to exist in global free trade, others argue that the euro is incompatible with our economic logic and national is a “normative framework” too rigid, leading us to the impasse. The appointment has been made.
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“nobody talks of an exit from the euro, even the Italians” – Look on Figaro Live
