Big business makes plea to ‘save the euro’

Dozens of Germany's leading business executives have made an impassioned defence of Europe's common currency in a newspaper ad campaign urging angry taxpayers to look beyond the cost of bailouts to the benefits the euro.

Big business makes plea to 'save the euro'
Photo: DPA

Bosses from 50 of Germany and France’s top companies, among them

Siemens, BMW, Deutsche Bank, ThyssenKrupp, EON and Daimler, joined the plea to stand firm with the embattled euro in advertisements carried in major newspapers on Tuesday under the headline, “The euro is necessary.”

The companies, representing annual sales of €1.5 trillion and five million workers worldwide, wrote that they were “concerned about the future of the euro and the common European economic and currency union” as the beleaguered eurozone member Greece stands on the precipice of bankruptcy.

Facing a rising tab from bailout packages for Greece, Ireland and Portugal, and with a second bailout for Greece in the making, many German taxpayers in particular are angry with the direction the currency union has since the global financial crisis in 2008.

But the coalition of business leaders, said the euro had made Europe unquestionably stronger and the consequences of allowing it to collapse were unimaginable.

“The euro symbolises the Europe of today. A collapse of the euro would be fatal step backward for Europe,” they wrote. “We have to convince our fellow citizens of this.”

They added that since the euro was introduced in 1999, nearly nine million jobs had been created in the eurozone and the euro had risen to become the second most important global currency after the US dollar, strengthening Europe’s economy and its businesses.

“Suggestions such as the exit of peripheral members or the breakup of the community into a northern and southern union are the wrong approach. They would have consequences that are barely imaginable today. Such populist solutions are not appropriate for the seriousness of the situation,” they wrote.

The campaign came as Greece’s parliament prepared for a Tuesday night vote of confidence in Prime Minister George Papandreou’s newly reshuffled cabinet – seen as crucial step toward further belt-tightening to get the nation’s public finances under control.

Eurozone finance ministers on Sunday night warned Greece would not get the next €12 billion instalment of its existing bailout package unless it proved it was moving ahead on austerity measures.

Countries such as Greece who were beset by debt crises had to be helped in the short term, the French and German industry leaders wrote on Tuesday, “to regain their financial independence and create for the people there a better prospect for the future.”

“The return to stable financial relations will cost many billions of euros, but the European Union and our common currency are always worth this effort.”

Switching to tougher language, the company bosses also stressed that action was needed to prevent future crises, including swifter sanctions for countries that broke the “stability and growth pact.” The 1997 pact obliges the 17 eurozone members to keep their budget deficits and national debts within certain limits – precisely to avoid the kind of ballooning debt that is now weighing upon Greece.

“In order to prevent in future a crisis such as the one we’re now going through, we have to strengthen the originally agreed stability pact and guarantee adherence to it,” they wrote.

“Indeed, sanctions must take effect as early and as effectively as possible. Furthermore, member states must co-ordinate their economic and fiscal policies more closely than before and speak publicly with one voice.”

The latter is a reference to concerns that conflicting messages from big players including Germany, France and the European Central Bank have spooked markets, worsening Greece’s problems.

“The common currency needs constant solid state finances, clear regulations governing adherence to the stability pact, transparent structures and fair standards for competition. Only this way will the euro emerge stronger from the debt crisis. There is no serious alternative to the common currency.”

The Local/djw

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How is Denmark’s economy handling inflation and rate rises?

Denmark's economy is now expected to avoid a recession in the coming years, with fewer people losing their jobs than expected, despite high levels of inflation and rising interest rates, The Danish Economic Council has said in a new report.

How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year. 

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’,  Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.  

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn. 

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment? 

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024  about 1 percent below the estimated structural level. 

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending? 

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”.  The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”. 

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025. 

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023. 

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write. 

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers. 

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.”