The Christmas holidays are over and the EU is experiencing a hangover as its currency plummets against both the Dollar and Sterling. In fact the currency has just hit a 9-year low against the former.
At a time when most business in the UK are now getting back to work, the Euro is unlikely to feature on most people’s minds, but unless the European Central Bank can do something to halt the slide, then it may well halt Britain’s economic recovery.
While a slide in the value of the Euro is good if you are planning a holiday this month, it may well result in a squeeze on businesses who rely on the export of goods to the European mainland. These goods will become more expensive to purchase in Euros and can result in British firms becoming less competitive.
In an attempt to rescue the struggling currency, it is predicted that the ECB will introduce quantitative easing (QE) – a method which has proved particularly effective in rescuing the UK economy.
Whether QE will work as well in the rest of the EU remains to be seen, with so many countries needing to work together and agree on the best course of action for the future. One potential problem is the re-emergence of political opposition to EU membership in Greece.