ECB Says: Britain Unfit for Euro
The European Central Bank (ecb) has declared that Britain couldn’t join the euro even if it wanted to. What a slap in the face for an economy purported to be “tier one”—especially since countries such as Malta, Greece and Portugal somehow managed to qualify. Antagonism toward Britain is growing on the Continent. Is Britain’s relationship with Europe doomed? Following its rapid economic breakdown, the explosion in government borrowing and the drastic collapse of the pound, Britain no longer qualifies for entry into the eurozone.
“Great Britain does not meet the entry criteria for the euro,” said Lorenzo Bini Smaghi, the ecb’s board member in charge of international affairs. “The public deficit will rise to around 6 percent (of gdp) in 2009 and even higher in 2010. Sterling’s exchange rate is not yet sufficiently stable,” he told Italy’s La Repubblica newspaper. Bini Smaghi is probably too generous. Some experts predict the deficit will hit 10 percent, far above the 6 percent threshold that has set off currency crises in other countries. Writing for the Telegraph, Ambrose Evans-Pritchard says it is possible that British debt auctions could fail this year, as the government attempts to borrow gargantuan amounts of money to fund economic stimulus packages.
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