Peter Lavelle at foreign currency exchange broker Pure FX
Is the upcoming EU summit on Jan 30th set to revive the fortunes of the ailing euro?
Nicholas Sarkozy and Angela Merkel certainly hope so: speaking in the last 24 hours, they envisioned a strategy that involves encouraging growth among EU countries while imposing tight public spending rules, thereby restoring market confidence. The pair hope to have this plan in place soon.
The problem though, is that continuing disagreements regarding the so-called Tobin Tax could quite possibly derail the summit.
After all, things haven’t changed since last December. David Cameron remains opposed to a Europe-only financial transactions tax, arguing that it would encourage financial firms to relocate elsewhere. (Ernst & Young support this statement, claiming in a recent estimate that imposing the Tobin Tax could cost Europe up to €116bn, as companies exit.)
Angela Merkel meanwhile faces opposition from inside her own coalition regarding the issue, which argues that pushing for an EU-wide tax without British support is futile.
However, on the other hand, the French remain adamant that such a tax must be legalised, even going so far as to declare they’ll impose it unilaterally if they cannot gain support. (This though could be a bluff on the part of Nicholas Sarkozy, who faces re-election in April.)
So how to overcome these disagreements? It seems obvious that – without some kind of consensus – the forthcoming summit will simply be a repetition of that last month.
Business as usual in other words for the ailing euro.