Revision Presentation - EU & the Euro Debate
This revised and extended revision presentation examines the debate about Europe’s Single Currency.
Launch revision presentation on EU & The Euro Debate
read more...»Europe Revision: The Euro
Revision notes on aspects of the EU single currency - is the UK economy better off outside of the Euro?
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Euro parity for the pound?
I might be shot down in flames in predicting this but somehow I doubt that we will reach parity against the Euro.
It is the nature of currency markets to overshoot when the external value of a currency is making a long over-due correction. Notice how stable the sterling –euro rate was between the years from 2003 through to the summer of 2007. It was almost as if the UK economy had locked itself into a fixed exchange rate against the Euro!
Sterling’s weakness can be put down to several macroeconomic factors:
Steep cuts in official policy rates by the Bank of England
A dramatic weakening of the real economy with growth forecasts being slashed
A downgrading of expected real returns from overseas investment in the UK
Expectations that the UK economy will be badly affected by the extended fall-out from the credit crunch – given the huge indebtedness of the personal and government sector
But to move from where we are now to parity between sterling and the euro would represent an exchange rate movement well out of proportion to any economic fundamentals. Will the central banks permit it?
Remember that the European Central Bank is behind the curve when it comes to making interest rate reductions and the pressure will be on the ECB to move further in the early months of 2009 as inflationary pressures subside and the Euro Area moves deeper into recession.
The Guardian: Speculators push pound to record low against euro
Great resources on inflation
A big hat tip to fellow Economist Mo Tanweer for flagging up this very useful selection of resources on inflation, price stability and monetary policy made available by the European Central Bank.
There’s this video clip:
There’s also these two pdf’s for pupils/teachers.
http://www.ecb.eu/home/pdf/students/leaflet_en.pdf
http://www.ecb.eu/home/pdf/students/booklet_en.pdf
They also have lots of short 5 min videos on the role of the ECB; its strategy etc.
Its also got some resources on European integration. They are under ‘FACTS’ presentations.
Central Banks- Power Failure?
Tonight on BBC Radio 4 (8pm) there looks like there will be an excellent hour long programme presented by Robert Peston examining whether central banks in the west have lost their power. Have a listen, there are bound to be lots of good last minute evaluative points you can get into you answers.
read more...»Chart of the Day: Interest rates in the Euro Zone, UK and USA
The US Fed is doing it, the Bank of England is doing it, so why is the European Central Bank sitting on its hands and refusing to budge policy interest rates lower? Do they think that the Euro Zone will be largely immune from the credit squeeze? Are they not concerned about the abnormally high value of the Euro against the US dollar which is putting so much pressure on western European exporters? Euro Zone rates have been on hold for a year now.
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