Editor's Viewpoint: Latest euro crisis requires cool heads
Published 15/05/2012 | 08:00
Euro-sceptics and Right wing parties in the UK are basking in a self-congratulatory aura as the Greek monetary crisis threatens the stability of the euro.
They may even hope that more people will rally to their cause as the economic and political fall-out continues. But this is no time for glee, even for the fiercest critics of the eurozone, because if Greece defaults and abandons the euro the result could be a very damaging contagion with other weak economies tempted to follow suit.
The eurozone is the UK's biggest trading partner and, on a local scale, Northern Ireland depends heavily on cross-border trade. The province needs to export to underpin its economy and any further problems in the Republic would be a serious blow. Those outside the eurozone cannot simply stand by and snigger at others' misfortunes because in today's financial world all countries are inextricably linked to each other and exposed to each other's failings.
The election of new French President Francois Hollande, who has promised to focus more on growth than austerity, also adds another layer of uncertainty to the melting pot. The question is now whether he can work as closely as his predecessor with German Chancellor Angela Merkel who champions a rigid programme of austerity measures. However her party suffered a defeat at the weekend which could indicate that even the Germans are rebelling against the policy of belt tightening.
This is a time for cool heads politically and the coming days and weeks will be a stern test of the cohesion within the eurozone. There appears to be a mood for some sort of compromise position between those who advocate spending their way out of recession and those who feel that only the grimmest austerity measures can work. However, getting the political leaders to agree to move to such a position will be a herculean task, especially as Greece cannot even form a government at this time because of internal divisions on the way forward.