Just what the euro needs - another new member with a creaking economy

Croatia already effectively lives with interest rate decisions made by the European Central Bank so it might as well sign up for full membership

Share
Related Topics

Small nations haven’t had a very pleasant time in the single currency of late. Ask Greece, Portugal and Ireland. So why does little Croatia still want to join? When asked the question, the country’s central bank boss, Boris Vujcic, has quoted Bob Dylan: “When you ain’t got nothing, you’ve got nothing to lose”.

Vujcic’s point is that Croatia already lacks monetary independence because euros are so widely used in the small Balkan state. Since it effectively lives with interest rate decisions made by the European Central Bank in Frankfurt, Croatia might as well sign up for full membership. Then it will at least get a vote on the ECB board.

Croatia doesn’t exactly have “nothing” of course. Gross domestic product per head, at around £12,000 adjusted for the purchasing power of the existing local currency, is about 50 per cent higher than other Balkan states. But the Croatian economy is also in considerable trouble already. It has been contracting since the end of 2011. Unemployment is at 18 per cent and rising, while youth joblessness has breached 50 per cent – a rate to match Spain and Greece.

The country is hoping that single currency membership will boost trade and foreign investment. Given that 60 per cent of Croatia’s exports go to Europe, with Germany and Italy the country’s biggest trade partners, that has some logic. Provided, of course, that the eurozone itself recovers in the coming years.

But what does euro membership for Croatia mean for the rest of the single currency club? With its twin budget and current account deficits and its relatively uncompetitive labour costs Croatia has similar characteristics to some of the other Club Med states that have had to be propped up by northern neighbours in recent years. If things go badly wrong, the eurozone could potentially end up with another costly bailout on its hands. Croatia may have nothing to lose by it joining the euro, but others might.

React Now

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Sales Executives - OTE £60,000

£25000 - £60000 per annum: Recruitment Genius: Are you passionate about Custom...

Recruitment Genius: Care Workers Required - The London Borough of Bromley

£15000 per annum: Recruitment Genius: This homecare agency is based in Beckenh...

Recruitment Genius: Sales Executives - OTE £50,000

£25000 - £50000 per annum: Recruitment Genius: Are you passionate about Custom...

Recruitment Genius: Sales Executives - OTE £50,000

£25000 - £50000 per annum: Recruitment Genius: Are you passionate about Custom...

Day In a Page

Read Next
Polish minister Rafal Trazaskowski (second from right)  

Poland is open to dialogue but EU benefits restrictions are illegal and unfair

Rafal Trzaskowski
The report will embarrass the Home Secretary, Theresa May  

Surprise, surprise: tens of thousands of illegal immigrants have 'dropped off' the Home Office’s radar

Nigel Farage
Jeb Bush vs Hillary Clinton: The power dynamics of the two first families

Jeb Bush vs Hillary Clinton

Karen Tumulty explores the power dynamics of the two first families
Stockholm is rivalling Silicon Valley with a hotbed of technology start-ups

Stockholm is rivalling Silicon Valley

The Swedish capital is home to two of the most popular video games in the world, as well as thousands of technology start-ups worth hundreds of millions of pounds – and it's all happened since 2009
Did Japanese workers really get their symbols mixed up and display Santa on a crucifix?

Crucified Santa: Urban myth refuses to die

The story goes that Japanese store workers created a life-size effigy of a smiling "Father Kurisumasu" attached to a facsimile of Our Lord's final instrument of torture
Jennifer Saunders and Kate Moss join David Walliams on set for TV adaptation of The Boy in the Dress

The Boy in the Dress: On set with the stars

Walliams' story about a boy who goes to school in a dress will be shown this Christmas
La Famille Bélier is being touted as this year's Amelie - so why are many in the deaf community outraged by it?

Deaf community outraged by La Famille Bélier

The new film tells the story of a deaf-mute farming family and is being touted as this year's Amelie
10 best high-end laptops

10 best high-end laptops

From lightweight and zippy devices to gaming beasts, we test the latest in top-spec portable computers
Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

Michael Carberry: ‘After such a tough time, I’m not sure I will stay in the game’

The batsman has grown disillusioned after England’s Ashes debacle and allegations linking him to the Pietersen affair
Susie Wolff: A driving force in battle for equality behind the wheel

Susie Wolff: A driving force in battle for equality behind the wheel

The Williams driver has had plenty of doubters, but hopes she will be judged by her ability in the cockpit
Adam Gemili interview: 'No abs Adam' plans to muscle in on Usain Bolt's turf

'No abs Adam' plans to muscle in on Usain Bolt's turf

After a year touched by tragedy, Adam Gemili wants to become the sixth Briton to run a sub-10sec 100m
Calls for a military mental health 'quality mark'

Homeless Veterans campaign

Expert calls for military mental health 'quality mark'
Racton Man: Analysis shows famous skeleton was a 6ft Bronze Age superman

Meet Racton Man

Analysis shows famous skeleton was a 6ft Bronze Age superman
Garden Bridge: St Paul’s adds to £175m project’s troubled waters

Garden Bridge

St Paul’s adds to £175m project’s troubled waters
Stuff your own Christmas mouse ornament: An evening class in taxidermy with a festive feel

Stuff your own Christmas mouse ornament

An evening class in taxidermy with a festive feel
Joint Enterprise: The legal doctrine which critics say has caused hundreds of miscarriages of justice

Joint Enterprise

The legal doctrine which critics say has caused hundreds of miscarriages of justice
Freud and Eros: Love, Lust and Longing at the Freud Museum: Objects of Desire

Freud and Eros

Love, Lust and Longing at the Freud Museum