Should we devalue the Euro?

Time to trim?

Time to trim?

I’m not a fan, usually, of devaluation, as it tends to be a short-term fix to more deep-rooted problems in an economy. Indeed, one of the benefits (Aside from cheap holidays) of a strong currency is that it makes raw materials cheaper, but also forces the economy to become more structurally competitive.

However, recent noises from the Elysee Palace, pointing out the damaging effect the (Artifically high?) strong euro is having on Eurozone exports, particularly with regard to Airbus, have suggested that it may be on the agenda. Or perhaps it’s been put on the aganda to encourage a weakening of the euro in the markets.

What would be particularly interesting would be the effect of euro devaluation on the UK. Would it stifle UK exports to the Eurozone? From an Irish perspective, we’d gain twofold, as our exports to the US and the UK would be strengthened, and with global resource prices at low-ish levels we could afford to import a little inflation into the economy. On top of that, the fact that we are inside the Eurozone means that the effect would be far less damaging than if we had a solely national currency.

It’s worth thinking about.