While the European Central Bank was busy cutting interest rates by 75 basis points on Thursday - its biggest move ever - our man in Brussels attended a roundtable discussing ten years living with the euro , with particular focus on the experiences of Spain and Portugal.
European Commission economist Carlos Martínez Mongay noted that both
He explained this by pointing to the better fiscal policies (budget surpluses) of
Both countries experienced an increase of around 10%, but the reasons for the increase were much different. In
What can we learn from this? Well, the obvious: that eurozone membership is by no means a paneca. A county's growth much depends on structural reforms. Or the lack thereof, such as in the case of Portugal. One can therefore not use the economic growth of
And one must also look at the disadvantages of sharing a currency and central bank with 15 - soon to be 16 - other countries, some with fundamentally different economic circumstances to one's own. It has been reported, of course, that in Spain and Ireland, the European Central Bank's low interest rates fueled American-style housing bubbles, which now have burst. Spain is currently suffering from a shrinking economy and exponentially rising unemployment. Having your national interest rate set by others is a tricky business indeed.