MaltaToday: Euro-phoria
OPINION | Sunday, 20 January 2008



Now that the celebrations, extravagance and squandering of money focused on the euro are hopefully over, we sincerely hope that the euro will prove to be a blessing to our country.
Because let’s face it, it is useless for the Government to waste money and resources from our taxes trying to tell us that the euro will not hit our pockets, and it is equally useless for the Opposition to ascribe the increase in prices to the euro, when it has now accepted EU membership and the EU Treaty.
When the people voted yes to Malta’s membership in the European Union, this yes included a yes to the euro: the EU commission made it mandatory for any new applicant state that membership to adopt the euro, and linked the two issues together so that no country could join without at the same time joining the euro zone. Of course, when is a different matter and the time is when a new member state satisfies the Mastricht criteria and gets the green light from Brussels. This is what Malta had to do to join the euro and this is where we are now.
The Government cannot continue to leave the plight of cost of living increase unattended; it is the eve of a general election and it cannot continue to favour the strong against the weak, because the public may be weak, yes, but not at election time. It is insulting for the Government to continue to ignore the fact that food prices will go up: they may not go up because of the euro but they are and will continue to increase.
Why the government should argue that the increase is not due to the introduction of the euro, but because of price increases from abroad, is something that goes beyond me.
A price increase is a price increase and while it is opportune for any Opposition to blame it on the euro, the man in the street does not give a damn if this is true or not. What matters to him is that he has now less or no money in his pocket.
Let us not forget that the moratorium for no increase in prices expires in March and we are being left in abeyance as to what will happen after that; although one does not need to be a Houdini to tell that time is ticking and the retailers and traders will not be ready to sacrifice any more of their profits after March. So let’s not continue to fool ourselves by saying that the cost of living will not be an issue in the coming elections or that cost of living is not going up.
Suffice it to say, that in the United Kingdom, a country (and therefore a market) of 60 million people, official figures published this week showed that the food prices are accelerating at their fastest rate since records began in 1992, fuelling a rise in the average family’s shopping bill of £750 Sterling a year. So it is inconceivable that Malta, so tiny with a population of less than half a million, will not be struck by an increase in food prices.
The increases are being driven by rising meat prices and global shortages in key crops, caused both by adverse weather and the demand created by China’s rampant economic growth. Not to mention the price of petrol. There is no doubt that Brussels, with its rotten Common Agricultural Policy, is also to blame: in its wisdom it has encouraged the importation of foodstuffs from foreign suppliers, reducing our own ability to manage demand.
It has imposed high cost employment laws and regulations giving us extra time off work and benefits, in isolation from its world competitors, and does not demand the same restrictions from non-EU importers. I cannot understand the workings of the EU: how health and safety are hygiene standards are only to be applied by us and on EU grown produce, thus making our products less competitive, while it is OK for outsiders to export their products to the EU without obliging them to do the same.
It is this kind of attitude that makes the EU citizens take such a dim view of the euro. In a survey conducted by the Financial Times last January, an overwhelming majority of citizens in the eurozone countries said that the euro has damaged their national economies and that more than two-thirds of the French, Italians and Spanish and more than half of the Germans believe the single currency has had a “negative impact” according to the poll. But the same survey reveals that more of them see a positive impact on the EU economy, suggesting that they see others benefiting rather than themselves. The exceptions are the French, more of whom see a negative rather than positive impact.
If in the UK, there is a debate at present as to whether the Bank of England should provide any relief to the people by cutting interest rates next month, although highly unlikely, the Central Bank of Malta now has no authority to do the same. With the euro, the power of the Central Bank of Malta has been shifted to the European Central Bank and it is the ECB which now decides on interest rates and on devaluation of the euro. The central bank governor only has to obey and lobby as much as he can so that the decisions that are taken will not have a high inflation and a high cost of living.
We are now at a stage in Malta where it is not enough to keep an inflation index. We must emulate other EU countries and start the Consumer Prices Index in order to have a better understand of our cost of living.

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