The Euro crisis isn’t just about reducing the market for UK goods
“UK manufacturing maintained its blistering start to the second quarter,” gushed Markit’s Rob Dobson. This kind of talk-up spin is all very well, but ‘blistering start’ was a profoundly silly choice of phrase: production output remains miles below pre-recession levels, and if export orders weren’t up with Sterling this cheap, then it really would be time for UK plc to pack up and go home.
The problem is, as The Slog’s been predicting since the turn of the year, the Pound was always bound to rise against the Euro once traders caught on to the depth of the EU crisis. (As I write, the £ is trading at 1.19.8 against the Euro).
This and the inevitable shrinkage in EU output means such tiny recovery as we have will be unable to take hold. While our employment is growing, in the eurozone it’s falling. And although we do not share the ‘common’ currency, we seem to be sharing in the bailouts – at a level more than enough to wipe out any Osborn savings to be made in the emergency Budget.
Although many commentators keep banging on about ‘public expenditure cuts’ being a bad idea, this is like worrying that one Japanese knotweed in a garden might kill the apple crop. Pull up the weed now, and there’ll be no need to pay for pest-disaster control later.