By Marcus Leach
All the eyes of the world turned to the EU Summit but rather than come up with a creditable long term-plan, EU leaders have instead come up with an agreement that will prove to be nothing more than a ‘shot in the arm’ for the eurozone.
James Hickman, Managing Director of Caxton FX, said that it was no great surprise to see the EU Summit fail to deliver effective solutions to the eurozone crisis.
“When you look at the bigger picture, the fiscal compact and other agreements that have come out of the EU Summit simply do not go far enough and it is more than likely that we will be looking at exactly the same problems well into 2012," Mr Hickman said.
“While we welcome responsible economic measures, is it realistic to think that periphery eurozone countries will be able to conform? Greece is certainly one country that instantly springs to mind.
“Additionally, when we look at recent bailouts, pumping in vast amounts of money into a fragile economy does not provide an effective long-term solution and its more than likely that we will see further eurozone crises next year, as well as another summit.”
Britain vetoed measures to resolve the eurozone debt crisis and has subsequently forced Germany and France to seek their own agreements. But what does this mean for the UK?
“David Cameron was completely right to protect UK interests and not bend to the will of the French and Germans," added Mr Hickman.
“While the economic climate in Britain is far from being rosy, the markets have responded positively to the Government’s austerity measures and we don’t need to be dragged down by those who haven’t been as responsible.
“This is clearly illustrated by the strength of sterling against the euro over the past couple of weeks, with the markets saying much the same.”
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