ECONOMY

Europeans feel the common currency has raised inflation

Brussels – The relationship between the citizens of the eurozone and their common currency continues to deteriorate. The cause of the discontent is the wave of profiteering that accompanied the introduction of euro banknotes and coins at the beginning of 2002. According to the latest Eurobarometer poll, 89 percent of eurozone inhabitants, and 92 percent of Greeks, are convinced that the euro is to blame for price increases. As a result, 44 percent of the respondents are unhappy that the euro replaced their national currency. On the contrary, happy euro owners account for 47 percent of the respondents. There is, as expected, a wide variety of responses among the 12 eurozone members. In order of satisfaction, we have Luxembourg (84 percent satisfied, 11 percent dissatisfied), Ireland (78 percent to 17 percent), Belgium (75 percent to 17 percent), Finland (75-22), France (60-33), the Netherlands (55-42), Portugal (48-24), Italy (48-44), Spain (47-28), Greece (44-44), Austria (42-38) and Germany (30-67). On a practical level, the belief that there has been profiteering has not changed the behavior of Greek consumers significantly. Greek consumers have divided into three, almost equal, camps: Members of the first declare that they have limited their purchases out of fear that they have been overspending; the second camp declares it has increased its purchases because it is not aware of how much it spends; finally, a third of Greeks have not changed their purchasing habits at all. It is, then, no wonder that Greeks are evenly divided on whether the replacement of the drachma by the euro was a good or a bad thing. As we saw above, 44 percent believe it to have been a good thing, 44 percent say it was a bad thing, while 12 percent either don’t know or don’t care one way or another. Moreover, 39 percent of Greeks believe that the transition from the drachma to the euro has weakened the country. Greeks, with 92 percent, are in third place among those who blame the euro for price rises, behind only the Italians (96 percent) and the Dutch (93 percent). This awareness of inflation, however, does not necessarily translate into any willingness to fight it. Greeks are those most willing, obviously for reasons of convenience, to rid themselves of the naturally counter-inflationary one-, two- and five-cent coins. With a 70 percent affirmative response rate, they are second only to Italians in wanting to replace the one-euro coin with a banknote, a typically inflationary move. Only one in three of eurozone respondents agree with this. It should be noted that those most distrusting of the euro are those who posed the most problems in its creation, the Germans. Besides being overwhelmingly unhappy about the disappearance of the Deutschemark, they are the ones who are mostly nostalgic for their old currency; two out of three declare that they buy fewer goods nowadays because they fear using the euro. Moreover, 86 percent of Germans consider that the economic situation in their country is worse than in other eurozone countries, a preposterous statement when one considers that they are among the richest members. In this question, 77 percent of Greeks also consider their economic situation worse than that in the other countries. Overall, however, the belief that «the others» are doing better is widespread: 48 percent of the respondents said so, versus 18 percent who feel the opposite.