SINGLE CURRENCY BLUES

WHILE the strength of the euro must give the “eurocrats” at the European Central Bank some pleasure in the long run it will hurt Spain's economy. For a country like Spain with a key industry like tourism, a strong currency is a recipe for disaster. If you look back through history tourism has boomed when Spain was considered cheap. Thanks to the strong euro Spain's manufacturing base is already suffering and I suspect that tourism will also take a dive. The weak dollar may be making the headlines but I suspect that exporters in USA PLC are literally laughing all the way to the bank. The strong euro is doing nothing to help Germany's long suffering manufacturing industries. It didn't look too good for the European Central Bank when the euro continued to tumble on the foreign exchange markets two years ago but if you were involved in all those industries which are reliant on outside business it was good news. A key example is the tourist industry. The leaders of all the euro-zones countries should be deeply concerned at the strength of their currency and especially Spain. Countries bordering the Mediterranean which are non-euro look set to prosper simply because they are cheaper. If the price of a meal for two is 60 euros in Palma and 35 euros elsewhere where are you going to go on holiday? And let us not forget the long suffering dollar. I was amazed last time I was in the U.S. how cheap it was and that was when the euro had parity with the dollar. And then there is the good old pound sterling which has dipped against the euro, but thankfully for the sake of Spain and leaving aside the criticism of the “little Englanders” remains relatively strong. If it had dipped further than Spain's principal industry would have had severe problems.