FRANKFURT, Germany — Stung by a decisive “non” and “nee” against the EU constitution by French and Dutch voters, the euro — a pillar of European integration — is again being blamed for higher prices and lingering economic malaise among the 12 countries that use it.
Its defenders assert that the common currency, which has fallen 10 percent in value against the U.S. dollar since March, remains solid. But the election results have revived critics who contend its time has passed — or never was.
While analysts say a country could legally leave the euro zone, it’s unlikely that any would — and none has talked about doing so.
But in Germany, where the euro is widely considered to have led to prices being rounded up, there’s a sentimental longing for a return to the mark. A May 26-27 poll of 1,001 people by the Forsa organization for Germany’s Stern magazine found they would rather have the mark than the euro by a 56 percent to 44 percent margin. The margin of error was 3 percentage points.
That, said Thorsten Polleit, an economist who covers Europe for Barclays Capital, is redolent of the criticisms voiced ahead of the euro’s rollout to the public in January 2002.
“There is a very real fear that forces within the euro zone are getting stronger than we suspected,” he said, referring to critics of the single currency.
But others argue that the euro is solid, and the votes shouldn’t set the tone for the euro’s future.
“They might have undermined the confidence for investors,” said Lorenzo Codogno of Bank of America, adding that foreign investors may pull back until the euro further recovers against the U.S. dollar.The euro requires a one-size-fits-all interest rate policy set by the European Central Bank, meaning countries with lagging growth can no longer resort to rate cuts on their own.
“The euro did not address the fundamental problems that are holding up European growth,” said Peter Morici of the University of Maryland. “In fact, by requiring such a geographically diverse economy to be locked into a single monetary and fiscal policy, it constrained growth.”
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