Estonia and the Euro
Posted by jonathanfryer on Wednesday, 23rd February, 2011
On 1 January, Estonia became the 17th member of the Eurozone and the first of the former Soviet republics to join the single currency. This was a remarkable achievement but one the young nation was determined to pull off, as was explained at a seminar on Estonia and the Euro put on by the London chapter of the European Movement at Europe House in Smith Square last night. The attraction of being in the single currency was obvious for a small country of fewer than 2 million people finding its way in Europe’s huge single market, and it was seen to offer a reassuring degree of financial security. But Estonia was also a welcome and well-justified entrant to the Eurozone, not least because it has one of the lowest levels of national debt around: just 10% of GDP. As one of the speakers, European financial consultant Graham Bishop, pointed out, for all the well-publicised problems experienced by the Eurozone over the past year or so – largely due to the failure of Greece and Ireland to maintain their competitiveness — the currency itself has actually remained bouyant. Poor sterling, meanwhile, has slumped in value by a quarter, which might be good news for British exporters, but makes imports dearer and will inevitably push up inflation, as we are already beginning to see. Moreover, Graham warned that Britain will become increasingly marginalised as one after another of the ‘new’ European Union member states adopt the single currency (as they are all obliged to do at some stage). One hopes that the Liberal Democrat members of the Coalition government are making that point strongly, even if many Conservatives find the message unpalatable.