I’m not an economist, but assuming that An Punt Nua would be devalued:
1. Tourism, and employment in tourism, would improve, at least from countries with stronger currencies like Switzerland and Germany.
2. Exports would initially be stronger. Non-food exports would eventually rise in cost to some degree as the cost of importing raw materials would rise.
3. Fuel prices would rise sharply.
4. Imported product prices would also rise sharply, possibly costing jobs in the retail sector.
5. Mortgage interest rates would probably rise sharply to protect the new currency. Political debate about who sets interest rates would become an issue. Would opposition parties pledge to bring the setting of mortgage rates under political control, and what effect would that have on the currency?
6. Foreign holidays to non-devalued countries would become much more expensive, boosting domestic tourism, presumably.
7. Exchange rates and charges would be back.
8. There would be a huge capital outflow as savings are moved out, into Sterling, etc, on the assumption that the new currency will fall in value, and could then be bought at a lower costs in the future, thus allowing savers to make a substantial profit. Would the government need to control how much money people are permitted to bring on holidays? Perhaps ban credit cards above a certain limit?
9. Long term, the currency would probably recover strength if the government stuck to the EU/IMF plan. But a possible nominally left-wing Sinn Fein government would have an interesting effect on the currency. Ironically, it could lead to Sinn Fein having to do a Trevor Manuel as in Nelson Mandela’s government, or Robert Gates as appointed by President Obama, and appoint a very un-Sinn Fein finance minister so as to not frighten the markets and scuttle the currency. SF in government could begin to resemble SF in government in the North. Or 1960s Fianna Fail.
10. Overall, it would not be the disaster some suggest, at least in the long term, but it would mean some very serious pain in the short and medium term, considerably higher prices and mortgage rates, gains and losses in employment, and an outflow of cash. Along with the additional problems of managing a currency, one would have to question the benefits, but it could be a close run thing.
4 thoughts on “Things that could happen if we left the Euro.”
First of all, there really is no “leaving the Euro”. What does a member state governement do? Demand the payment of taxes in a different currency suddenly one day? There is a chance that they can become “bi” in the sense that people will use multiple currencies as they did in border regions before the Euro. I could see Greeks doing bank transactions in Dollars or Rubles or whatever-works, and using Euro cash while not being party to the Eurozone, much as US dollars are “also used” in places like Panama and El Salvador in cash, as well as having their currencies pegged to it.
Much of what you fear will happen without a change to the Euro. The wealth and savings eroding effect of inflation is a near certainty. To remain exporting ?ber-dudes, the Euro will have to devalue. To square away the debt that has made parts of the Eurozone into bums, the Euro will have to devalue.
For one thing, you can’t really sell anything to most asians if they can’t afford your precious doohickeys and superlative whatnots.
Better oil up my wheelbarrow, so I can head to the shops for a loaf and the paper.
Leaving the EU would save Britain some money, but probably not reduce much of the regulations, which Britain would have to obey if it wanted to sell products into the single market. Don’t forget, a lot of the red tape in Britain is generated by British civil servants. In Ireland, we’re bound by the same EU directives, and yet have nowhere near as much regulation.
Some people want to bring back hanging in the UK. Many don’t.
Interesting.
Of course, the benefits might be a lot greater if you actually left the EU altogether. Not sure about Ireland but in Britain we would save billions and could shed all these thousands of orders we get from the EU every year.
As for pain, there is going to be a lot of it over the next decade when people ill-equipped to deal with the world’s financial problems (the politicians) try to hopelessly cope.
People in the UK want to bring back hanging. I would like to see this punishment given to anybody who steals from the tax payer. This would focus their bleddy minds (bleddy is a South African word and you have probably guessed what it stands for.)
First of all, there really is no “leaving the Euro”. What does a member state governement do? Demand the payment of taxes in a different currency suddenly one day? There is a chance that they can become “bi” in the sense that people will use multiple currencies as they did in border regions before the Euro. I could see Greeks doing bank transactions in Dollars or Rubles or whatever-works, and using Euro cash while not being party to the Eurozone, much as US dollars are “also used” in places like Panama and El Salvador in cash, as well as having their currencies pegged to it.
Much of what you fear will happen without a change to the Euro. The wealth and savings eroding effect of inflation is a near certainty. To remain exporting ?ber-dudes, the Euro will have to devalue. To square away the debt that has made parts of the Eurozone into bums, the Euro will have to devalue.
For one thing, you can’t really sell anything to most asians if they can’t afford your precious doohickeys and superlative whatnots.
Better oil up my wheelbarrow, so I can head to the shops for a loaf and the paper.
Leaving the EU would save Britain some money, but probably not reduce much of the regulations, which Britain would have to obey if it wanted to sell products into the single market. Don’t forget, a lot of the red tape in Britain is generated by British civil servants. In Ireland, we’re bound by the same EU directives, and yet have nowhere near as much regulation.
Some people want to bring back hanging in the UK. Many don’t.
Interesting.
Of course, the benefits might be a lot greater if you actually left the EU altogether. Not sure about Ireland but in Britain we would save billions and could shed all these thousands of orders we get from the EU every year.
As for pain, there is going to be a lot of it over the next decade when people ill-equipped to deal with the world’s financial problems (the politicians) try to hopelessly cope.
People in the UK want to bring back hanging. I would like to see this punishment given to anybody who steals from the tax payer. This would focus their bleddy minds (bleddy is a South African word and you have probably guessed what it stands for.)