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Calls for euro to be protected

posted 25 Nov 2010, 11:02 by Mpelembe Admin   [ updated 25 Nov 2010, 11:05 ]
France and Germany call for the euro to be protected from future turmoil, as questions are raised about the European single currency's survival.
EUROPE-EURO PRESSURE - French foreign minister Michele Alliot-Marie meets her German counterpart Guido Westerwelle in Berlin.

The top talking point, the worsening crisis for the European common currency the euro.

Both agreed that the euro must be protected and called for a rescue mechanism to do so.

 GERMAN FOREIGN MINISTER, GUIDO WESTERWELLE, SAYING:

"We want a euro which is permanently protected from turbulence by a weather-proof system of rules. What we are talking about is the heart of Europe's unity. We want long-term stability of the euro and not just to overcome a short-term difficulty. That's why we are working on the creation of a rescue mechanism which stabilises the euro."

FRENCH FOREIGN MINISTER, MICHELE ALLIOT-MARIE, SAYING:

"Today we are facing a speculative attack against Europe and against the euro in general. This of course goes mainly against countries perceived as vulnerable in the eyes of those speculators."

The euro has plunged as investors fear the debt crisis which has led to bailouts for Greece then Ireland could spread to other at risk countries.

Spain is the country which carries the greatest concern.

The size of the Spanish economy has some fearing it's too big to bailout.

RBS senior European economist Jacques Caiulloux says although Spain is not at risk yet, investors are anxious.

RBS SENIOR EUROPEAN ECONOMIST JACQUES CAIULLOUX, SAYING:

"We are very worried about the overall situation we do think that there are elements in this crisis of self-fulfilling prophecies which can lead to very non-linear outcomes and you move from one country to another even without consideration of the fundamentals so we do think that there are very negative dynamics at play and this is what needs to be tackled as quickly as possible from policy makers."

Severe austerity measures have been adopted by many European countries.

Ireland's government is preparing to find out just how unpopular they are.

Voters are heading to the polls in the north-western county of Donegal, and are likely to punish Prime Minister Brian Cowen's ruling party.

WILLIE SCOTT, SAYING:

"What I am concerned about in the midst of this kind of belt-tightening exercise, there has to be room for growth in the future. I am thinking particularly of my daughter, we really need to get things sorted out, in order that there is a future for the young people of this country."

Ireland's 2011 budget is the first step in a four year plan agreed with the IMF and EU to dig the country out of debt.

But losing in Donegal could mean that budget isn't passed, dramatically worsening the crisis.

Cowen's government is not expected to last much beyond the new year, leaving a new one to try and bring Ireland's budget under control.

Andrew Potter, Reuters

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