EU at ‘crunch point’ over future of the Eurozone says expert

We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info

Data from the EU’s statistics office, Eurostat, reported the eurozone had swung to a small deficit for November after registering large surpluses the previous year. Part of this is put down to the soaring costs of imported oil and gas.

Also contributing to the deficit is a shortage of key parts, such as microchips, which have been harder to get hold of for industries like manufacturing.

The 19 eurozone countries saw a non-adjusted trade deficit of €1.5 billion (£1.25 billion), which pales in comparison to the November 2020 surplus of €25.0 billion.

Exports revenues grew just 14.4 percent whereas import spending increased by nearly a third.

Looking more broadly at the 27 EU nations, the energy trade deficit shot up by over two-thirds between January and November.

Within these months, the EU’s trade deficit with Russia more than quadrupled.

Russia is a huge energy supplier to the EU, providing a third of its oil and 40 percent of its natural gas.

The deficit there shot up from €13.7 billion between January and November 2020 to €60.4 billion a year later.

This is worrying news for a eurozone that has boasted an impressive trade surplus and buoyed the economies within it for years.

This has not been helped by the complications of the pandemic, which has disrupted the usual flow of exports and key industries across the world, not to mention supply chains.

The eurozone’s dealings with its two principal trading partners, China and the US, also fell for exports.

These stats have opened up the eurozone to increasing criticism around its competitiveness.

The eurozone has been known as an industrial and manufacturing powerhouse through the twentieth century – the EU’s largest economy, Germany, was particularly central to this reputation.

DON’T MISS: 
Brexit LIVE: ‘No appetite for Article 16’ [LIVE] 
Angela Rayner clashes with Sir Keir Starmer over Wakeford defection [ANALYSIS] 
What Prince Andrew’s title axe means for future royal role [INSIGHT]

It steamed ahead with manufacturing of everything from machinery to aerospace equipment and automobiles.

However, it neglected to really focus on the opportunities of embracing digital technology and artificial intelligence, looking at the new frontiers for economic growth and trade, some critics say.

Others point to high taxes and welfare bills that reduce how competitive the eurozone’s trading can be, and the European Central Bank absorbing debt of member states whilst being forced to print more money.

Within the eurozone, individual countries of the bloc are seeing themselves struggle matching exports with imports.

France’s trade deficit hit the highest levels on record at €9.7 billion at the end of last year, and Germany struggled to maintain its formidable reputation for exports and production.

Although a number of countries – including the UK – operate with a trade deficit, it is a measure the EU takes notice of.

Bruno Le Maire, France’s finance minister, commented on the pessimistic data for France’s deficit to criticise the strength of an exporter that falls into deficit.

He said: “There is no great nation with a foreign (trade) balance that remains in deficit.”

Source: Read Full Article