Outlook: Oskar's gone but the problems remain
Saturday 13 March 1999
The German government was insisting yesterday that the departure of its architect had not toppled the tax plan that caused such uproar among insurers and utilities. Allianz alone said it stood to lose 2.5 billion marks and would move abroad. Although dullard Hans will probably compromise on the corporate tax increase eventually, the stand-off is clearly not yet over.
Another part of the reason for the surge in the euro was the judgement that the ECB will now be able to cut Euroland interest rates to boost growth without appearing to give way to political bullying. German GDP declined in the fourth quarter of last year. Yesterday brought new figures showing Italy's GDP fell during the same period as well. So the odds on a rate cut must have improved. Not so fast, though. Wim Duisenberg poured cold water on the idea again yesterday, saying governments must put their finances in order first.
Nor does Oskar trotting off into the sunset resolve the really fundamental question about Euroland. It was posed by Mr Duisenberg again yesterday: will member governments engage in structural reform to move back the barriers to potential growth? Or, to put it in a way guaranteed to annoy our European partners, will the rest of the EU become more Blairite now?
Possibly - the biggest obstacle has gone. But not necessarily. There is still no consensus on the appropriate policy agenda for the EU. We still don't really know whether the euro is going to be allowed to act, as it should, as a catalyst for free market reform across Europe, or whether by contrast it will become a stultifying conduit for centralised tax harmonisation and rigid control of labour and capital markets.
Whatever the answer, the economic management of Euroland has, overnight, become much less problematic. Mr Eichel should make a point of not bullying the ECB and not hectoring his fellow finance ministers. Even if he wants to boost demand the old-fashioned way, he is more likely to get a rate cut if he makes harmony, not harmonisation, his watchword.
- 1 Strictly Come Dancing 2014: Gregg Wallace joins line-up as final celebrities revealed
- 3 Oil tanker with $100 million cargo goes missing off Texas coast
- 4 Saudi Arabia executes 19 in one half of August in 'disturbing surge of beheadings'
YouTube video posted by Isis militants shows 'execution of 250 Syrian soldiers'
Keira Knightley topless: Usually conservative actress does own take on #Freethenipple campaign for Interview Magazine
Oil tanker with $100 million cargo goes missing off Texas coast
George Galloway left with severe bruising after attack in Notting Hill by man 'shouting about the Holocaust'
Brother and sister, Christopher Buckner and Timothy Savoy, arrested for 'committing incest after watching 'The Notebook''
Robin Williams Emmys tribute led by Billy Crystal criticised for including 'racist' joke about Muslim woman
The Rotherham child abuse scandal is a tale of apologists, misogyny and double standards
Scottish independence TV debate: Pumped-up Alex Salmond bounces back in bruising second round against Alistair Darling
What do immigrants really think of Britain? Polish immigrant's Reddit post goes viral
Do you realise just how foolish the UK looks?
With Douglas Carswell joining Ukip, my party has taken another giant step forward
- < Previous
- Next >
iJobs Money & Business
£35000 per annum: Harrington Starr: Network Engineer (CCNP, CCNA, Linux, OSPF,...
£50000 per annum: Harrington Starr: DevOps Engineer (Systems Administration, L...
£60000 - £70000 per annum: Harrington Starr: A prestigious leading professiona...
£50000 per annum: Harrington Starr: Financial Technical Consultant (C++, C#, F...