Monday, January 29, 2007

As good as it gets

It is not only in Iraq that there is an ongoing battle for "hearts and minds". There is one raging in the Eurozone and, according to FT-Harris poll just published, the European Union is losing it.

An overwhelming majority of citizens in the big eurozone countries believe the euro has damaged their national economies. Of the French, Italians and Spanish, more than two-thirds believe the single currency has had a "negative impact". More than half of Germans feel likewise and, in France, a mere five percent said the euro has had a positive effect on the French economy.

More than half of citizens in countries using the euro say they prefer their former national currency, according to the poll of 5,314 adults in Germany, the UK, France, Spain and Italy, which was conducted between January 10 and January 22. Almost two-thirds of Germans say they preferred their former currency, the D-Mark.

Despite that, citizens of eurozone countries generally see wider benefits of the euro. More Germans, Italians and Spanish see a positive impact on the EU economy than a negative effect. The big exception is the French, more of whom see a negative rather than positive impact.

The interesting thing is though that the results coincide with a relatively buoyant time for the euro. Eurozone growth prospects have brightened, thanks largely to a pick-up in Germany, and employment prospects look better than they have for some time.

Given an economic downturn or currency crisis in the Eurozone, one can see sentiment turning even more sharply against the single currency, which means that this result is probably as good as it gets. From here, it can only get worse.

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