Looks like it’s finally happening: after staying surprisingly strong during the crisis around it, the currency itself is finally buckling under. It’s breaching 130 to the US$ and it’s a looooong way down. Which just proves the UK’s opting-out from fiscal union last week just wasn’t the story.
This story was about – has always been about – mainland Europe’s inability to service its debt pile. The economies of Europe spend too much on their public services, without a big enough tax base to pay for it.
(So does Britain, of course. But with a cost-cutting Conservative government in charge at least the markets understand our risk of succumbing to the same factors is smaller and falling. And this’ll continue to be the case as long as Cameron can keep the endless wailing of the public sector under control. Encouraging sign that last month’s public sector general strike was a bit of a flop.)
In the words of a Bloomberg commentator today: this sucker’s goin’ down.