More evidence our problems aren’t the fault of the Euro
New figures for industrial production across Europe raise an important question: if the UK’s economic woes are caused by problems in the Eurozone, why isn’t this afflicting other countries that are in the EU but not in the Euro?
Over the past couple of weeks, Duncan and yours truly have highlighted evidence that should make government spokespeople think twice about their current defence against charges of economic incompetence (“It didn’t happen, I wasn’t there, it was two other blokes, I couldn’t help it and I’m very sorry”).
The latest prosecution evidence is the Eurostat data for industrial new orders (the value of future deliveries of products). The headline is the 6.4% fall for the Eurozone between August and September.
This is a large drop. And it isn’t good news for this country: as I’ve said before, we don’t agree that Eurozone problems are to blame for our current stagnation, but we don’t deny that trouble lies ahead.
These data show a huge difference between new orders in Eurozone countries and other EU members. In most Eurozone countries, new orders are down, whereas they are still growing in non-Euro EU countries – with the exception of Sweden and the UK. Here’s the figures for ‘manufacturing working on orders’ for non-Euro countries, the figures are the change between August and September:
- Denmark + 14.0%
- Latvia + 13.1%
- Poland + 5.1%
- Czech Rep + 4.8%
- Romania + 2.3%
- Hungary + 2.1%
- Lithuania + 1.7%
- Bulgaria + 0.2%
- Sweden – 1.8%
- UK – 1.9%
If the Euro zone’s problems are what is holding back British firms, why isn’t that happening to these other non-Euro economies? In fact, you’d expect the Euro to be an even bigger problem for the East European countries, where the Eurozone is an even more important market.
The Eurostat release also includes data for year-on-year changes. These don’t show the same divergence between Euro and non-Euro countries, which argues against claims that the Euro is to blame for lower production in this country dating back to the start of the year. What the month-on-month and year-on-year figures have in common is the UK’s poor performance. Our year-on-year change is – 3.4%: only Italy and the Netherlands have worse figures.