Economic crisis harbours dangers for the euro

In his speech to both chambers of parliament French President Nicolas Sarkozy defended the country's high budget deficit of seven percent, arguing that the economic crisis renders budget curtailments impracticable. The liberal daily NRC Handelsblad points to the huge contrast with Germany, which is stressing strict budgetary discipline: "The truth lies somewhere in the middle. The crisis is so serious that enforcing budgetary discipline too early can nip economic recovery in the bud. But if the state's finances are in disequilibrium for too long they can sow the seeds for a new crisis, whether by allowing the debt burden to get out of hand, through rising inflation, or a combination of both. France and Germany are not seeking a middle path. The rift between the two at the heart of the Eurozone presents a potential risk for the common currency. If things continue, it will soon make a common monetary policy implemented by the European Central Bank as good as impossible."

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