I'm just grateful that we are in the Euro. I do a bit of business in the UK, and I increased my charges by 10% last week in the wake of the weakness of their currency. Luckily I am in a very niche high tech market so I can get away with it, but I wouldn't like to be exporting "commodities" over there as it were.
The UK cut their VAT rates in order to stimulate consumer spending which is what got them into this mess in the first place. A French analyst yesterday said that they would not follow that course of action, as that would mean that French consumers would "just buy more Chinese television sets."
Instead, they are going to spend more on capital infrastructural projects like more railways, motorways and school building in order to keep the money in France. So are Germany. And funnily enough, little old Ireland is maintaining it's capital infrastructural investment programme for next year and has increased VAT rates. Our capital spending for next year will be 6% of GDP, whereas the French and Germans are increasing their spending to 1.5% of GDP in order to stimulate their economies.
We are repairing an infrastructure deficit, granted, but we would be much worse off if we cancelled all capital infrastructure investment and were outside the Eurozone.
