Euro Zone struggles with its fundamental construction
The Troika yesterday approved the release of the next €8billion payment to Greece. However, progress on the countries austerity measures was described as patchy, and the Troika warned that additional measures would be needed to meet its 2013 debt targets. This may be easier said than done, with practically the entire Greek work force on strike over the current measures at some point this week. This is one Greek tragedy which appears to have no end in sight.
Slovakian parliament yesterday rejected changes to the size and powers of the European Financial Stability Fund (EFSF). It is still widely expected that the vote will be passed later in the week after the Government left office following the vote. This failure to pass the treaty shows the problems the Euro zone faces in forming a single monetary union. All 17 states with in the Euro zone must act selfishly to appease their own voters. The alternative is that they lose power and this is unlikely to be the last Government to fall in the Euro zone.
Meanwhile, the UK continues to feel the side effects of the Euro crisis and austerity measures, with GDP growth of 0.5% predicted for the third quarter by the National Institute of Economic and Social Research (NIESR). Although 0.5% was significantly stronger than the 0.1% seen in the Second quarter, this was put down to temporary factors such as the Royal Wedding. However, growth is still a significant improvement from the figures which showed the economy had effectively flat lined at the beginning of the year.
The Bank of England’s chief economist, Spencer Dale, yesterday stated that the economy is likely to get steadily weaker throughout the rest of the year. When questioned on whether the £75 billion pounds of asset purchases would be enough to help Britain’s economy turn the corner, he replied: ‘I think it will depend more importantly on what happens in the rest of the World’.
What does this all mean for me? Well buying your EUR, USD, AUD or any other currency at the wrong time could cost you a fortune. There is no crystal ball but Currency UK can give you the information you need to make an informed decision.