After nearly two hours of intense debate and quality, it falls some answers on the theme of Euro-Café. The outline and reported provide a synthesis of what was said between those who participated.
Euro and Dollar
First, the strength of the Euro was a widely shared element. This effect seems obvious in view of the current weakness of the dollar. On March 27, 2008, 1 € was worth 1 $ 57. This parity is even more striking than the original parity of the Euro with the dollar was 1 € to $ 0.80. This fact has two main consequences: the reduction of energy costs and falling exports outside the eurozone, which pushed some companies want to relocate in the dollar zone.
Regarding energy, including oil, it is purchased mainly in the Middle East in dollars (the "petro-dollars"). Thus, a 30% depreciation of the dollar vis-à-vis the euro means a corresponding reduction of 30% of the energy bill in the Eurozone over the energy bill paid by the United States, which is comparative advantage. This demonstrates the relative protection that now produces the Euro against the "surge" of oil prices is now over $ 100 a barrel for Brent. Thus, despite the exponential increase in oil prices, energy fundamental to the European economy, the Euro we allows to contain rising energy prices.
The current appreciation of the euro weighs on exports at the same time outside the Euro zone (40% of exports), mainly to countries who pay in dollars, or whose currency is pegged to the dollar (like the Yuan, Chinese currency). For example, 24% of EU exports are destined for the United States. According to Eurostat, in January 2008 the Eurozone recorded a deficit of foreign trade (imports exceed exports) of 10.7 billion euros deficit in January 2007 than where it was 7.3 billion Euros. This threat to exporation worries some industry leaders, who speak more to relocate part of their productive apparatus in the dollar zone (Airbus Industries, Dassault Aviation and Renault in particular). The most relevant and cited numerous times by the press, is Airbus. This business of aerospace (where all transactions are in dollars) showcase of European cooperation, global competitor in its American counterpart Boeing, the company is considering a partial relocation of its construction activities in the dollar zone and major job losses. These two phenomena reveal the fierce competition that Airbus has to undergo his American challenger due to the difference in the euro-dollar is nearly 30% in two years. Thus, prices that offer Airbus top 30% not for lack of competitiveness the company but by the strength of a currency and the weakness of another: " the e only way prepare the company for a dollar that no one control is to move in the dollar zone unfortunately " says Louis Welsh, CEO of Airbus. Monetary developments penalizes yet competitive industry. Each variation of 10 cents of the euro against the dollar rising cost 1 billion euros in the European group.
Euro Inflation
The strong euro is also the result of the policy of the European Central Bank ( CBE) is concentrated on the fight against inflation. Indeed, the inability to use the part of political leaders to currency devaluations makes a credible policy against inflation. However, the low inflation that knows usually Euro (about 2% per year) is the strength of the euro on the international monetary scene, and allows it to compete with the dollar. However, according to Eurostat in February 2008 inflation in the euro zone reached 3.3%, which is higher than the theoretical target of the ECB (2%). Most participants in the debate felt that this increase in inflation that was timely and it does not question the policy and the current status of the ECB (the fight against inflation and independence from the power policy). The complete independence of the ECB is so fundamental and necessary : The independence of monetary power in relation to political power allows the latter not being able to operate the lever monetary devaluation, and thus return to the devaluation-inflation cycle. R emit into question the status and policy of the ECB would make this institution a scapegoat. However, some stressed that in the event of an economic situation like the one we know now, lower the rate of the euro might be a good thing.
Anyway, this impossibility of devaluation, according to the policy against inflation, then the forces European economies to reform. Indeed, the competitive devaluations performed before or after the accession to power of a government is in crisis, are no longer possible with the status of the ECB . The savings must reform itself, that is to say, become more competitive. To devaluation-inflation cycle, the EU has opted for independence circle-stable prices considered virtuous .
Inflation and Consumer Price
Moreover, although inflation real remains low among the lowest that Europe has had to deal with for decades, inflation experienced it, is increasing in most countries. The introduction of the Euro is PO heart of many households, corresponding to the drastic increase in consumer prices. The question then is what is meant by "consumer prices". These consist of both real estate prices and rents, prices of food, health prices, and energy prices. So, in fact, inflation can be lived with more impact for households that what economists can quantify. This dichotomy is the result of the difference between high inflation that affects consumer goods such as food, and very low inflation even lower prices related products such as computer or appliances. Inflation affects more experienced painfully modest homes of upper class households because of the imponderable is that such food in regular purchases. Indeed, the classes with low incomes are hardest hit by this inflation by the large share represented by the diet, particularly in the budgets of small people. Thus, social disparities increase between people of different classes because of the inflation experienced.
So, inflation for the lower classes affects their purchasing power. Indeed, inflation are disproportionately renters than owners, or tenants are often the lower classes. Inflation affects more severely food and energy, yet these expenses are much higher proportion in the budgets of lower classes. Thus, the purchasing power of the lower classes is weakened, while the rest of the affluent stable . Social inequalities are increasing with inflation. In this sense, a struggle against inflation aimed primarily intangibles expense items (rent, food, energy ...) appears desirable . The high prices in the distribution (including food) raise the issue of low competition in sector wide distribution the detriment of consumers, particularly the most modest.
inflation and social inequality
So the fight against inflation promotes the purchasing power but unevenly and inadequately. Unevenly because, as has been demonstrated, the most affected are poor. Insufficient because a monetary policy against inflation alone can not increase the purchasing power of citizens. Moreover, the purchasing power does not depend on the price level only, it is the result of relative level of price / wage level. But in the euro area, nowhere wages are indexed to prices and they are progressing more slowly than inflation. Besides a fight against inflation, a policy for employment and wages may therefore be useful. But expanding the tasks of the ECB was not the wish of the majority of participants. Competition holds much potential anti-inflationary monetary policy that aimed at this goal. The maintenance of the ECB's monetary policy aimed at price stability, and strengthening, in France, an environment competitive intent in the field of mass distribution would be desirable to strengthen the purchasing power of the French, in comparison other Europeans like the Germans. However, lower interest rates, although it promotes inflation, lower the cost of the Euro and could help the investment.
Monetary Policy and Industrial Policy
Beyond the debate on monetary policy of the European Union and the power Buying, thoughts focused on the question of industrial policy in France. The strength of the euro, damaging to exports, has little effect the industrial power of Germany, the largest exporter in the world (although some signs of concern are emerging among our neighbors face the exchange rate Euro / dollar today) that records large trade surpluses while all EU accuses trade deficits with the outside. With a common monetary policy, how an economy can it see its flourishing industry, and another in trouble? The reform of the industrial policy of France is asked.
