Dutch government recognises euro was full of flaws

23 November 2011

Dutch government recognises euro was full of flaws

Finance Minister Jan Kees de Jager considers that ‘with the knowledge we have now the euro would not have been introduced.’ During the annual debate on the national budget in the Senate, De Jager told SP Senator Geert Reuten that there were many flaws in the euro which it was now difficult to do anything about. At the time of the euro’s introduction these flaws were pointed out by a large number of sceptical economists as well as by the SP. Then, they weren’t listened to. But now...

De Jager now confirms that at the time of the euro’s introduction insufficient attention was paid to the massive differences that existed among the participating countries and in particular their economies. In his opinion, not only politicians, but also the financial markets had failed at the time of the introduction of the euro and afterwards. But now, in his view, there was no way back. Giving up the euro would bring enormous costs along with it, he told the Senate. When Senator Reuten asked him how much the government estimated these costs would be, however, he had no answer.

Reuten assumes that a responsible government would at least be preparing for a number of different scenarios in case things went awry with the euro, which is under heavy pressure from speculation on the financial markets. In the southern member states interest rates on bonds are rocketing, as is unemployment. And in the northern member states austerity is preferred to investment, which is bad for the entire Eurozone economy.

The SP Senator also noted that instead of driving wages in the southern member states further downwards, wages in the north could be raised somewhat. In his view that would be economically logical and responsible and rather more civilised than forcing people in Greece, Italy, Spain and Portugal below the poverty line – where they would remain in the long term. All the same, Reuten was pleased with the recognition on the part of the government “that the critics back then weren’t so crazy after all.”

According to Senator Reuten the bank tax now being introduced should be made stiffer and thereby more effective, while he also wanted to see the government look into how the gap in income and wealth in the Netherlands could be prevented from growing still wider.

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