Belfast Telegraph

Tuesday 23 September 2014

For how long will Germany and France feed PIGSI?

We all know you don't get summit for nothing, as they say in the north of England. You do, however, get a gathering of the top bods in the Eurozone every couple of weeks these days and, although the markets are viewing these tete-a-tetes with growing sense of 'well nothing much changed after the last time they met', it seems that some form of agreement has been reached at the latest meeting to stop the euro rot.

Or has it? By backing Greece, the virtual circle of mutual support within the EU has been complete once more and will no doubt allow the country described as the seat of civilisation more time to try and iron out some pretty big economic imbalances.

On the other hand, lending more money to an economy already struggling to support itself is akin to throwing good money after bad.

But what's the alternative? Further dithering by the EU's kingpins would merely deepen the jitters in the financial markets and make it even more difficult for the PIGSI (Portugal, Ireland, Greece, Spain and Italy as they shall now become known) group of countries under the ratings agency spotlight to borrow.

Of course, that's not to say yesterday's action will cool the manic mood of international money markets. They realise there's trouble in euroland and have been directing their vast sums of money accordingly. The euro had climbed by a fraction after yesterday's meeting but, at 88 pence, still remains well below the early July highs above 90 pence - good news for those of you lucky enough to be going on holiday to the content.

But a deeper fundamental problem exists, one which threatens the very existence of the single currency. In essence, how long will the likes of Germany and France, with economies which are not in rude health but certainly in better shape than some of their contemporaries, be prepared to continue subbing the PIGSI?

One person will be happy: David Cameron, not only because the UK is not part of the Eurozone but also because it takes the heat off him in a week when he's been making all the wrong headlines.

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