Most Europeans believe euro has hiked prices

15th March 2005, Comments 0 comments

15 March 2005, BRUSSELS-More than 90 per cent of consumers in countries that use the European single currency believe the advent of the euro has sent prices soaring, leading Brussels officials have admitted.

15 March 2005

BRUSSELS-More than 90 per cent of consumers in countries that use the European single currency believe the advent of the euro has sent prices soaring, leading Brussels officials have  admitted.

Joaquin Almunia, the European Commission's monetary affairs commissioner, acknowledged that the idea had "taken hold" in some countries that the euro had sharply increased the cost of living, the British Daily Telegraph reported.

This was poisoning public opinion against plans to extend the currency to the whole of Europe.

Such gloom had "spilled over" into the 10 new member states that joined the European Union last year.

An average of 71 per cent of people in the new states expressed fears of "abusive price rises and cheating" should they one day switch to the euro, Almunia said.

Addressing what amounted to a crisis meeting on the three-year-old currency, he told colleagues they faced, "a battle for the hearts and minds of European consumers. Losing it will mean very serious consequences in terms of consumers' attitudes to the euro".

In some countries, such as Greece, Spain and France, 98 per cent of consumers believe the euro has favoured higher prices.

Almunia and his officials offered a flurry of statistics and explanations, insisting the euro was not to blame.

Officials pointed to everything from bad weather and epidemics of animal disease in the year after the euro's introduction, to oil price rises and sharp hikes in cigarette taxes, as causes of inflation.

Above all, they said that inflation was not as high as people thought.

Officials said actual inflation had been held to about two per cent across the eurozone, though EU attitude surveys found the public believed inflation was nearer 5 per cent.

Jan Schmidt, the director of the commission's economic evaluation service, said consumers largely based their perceptions of prices on local, everyday purchases, such as cups of coffee, bread, restaurant bills or car repairs.

The cost of such "psychologically important" goods and services had risen sharply in many cases. Other types of goods fell in price, but they were harder for consumers to recognise, Schmidt said.

Officials pinned most blame on Europe's small businessmen, from barbers to newsagents, cafes and dry cleaning stores.

They said many had taken advantage of the euro's arrival to impose "unjustified price increases" on their local customers, who were unlikely to travel hundreds of miles to find a cheaper meal or haircut.

Brussels officials make no secret of their dream to extend the single currency from the present eurozone of 12 nations.

But public support for the euro ebbed away last year in such key eurozone countries as Germany, Holland and Austria, according to a Commission-sponsored "euro-barometer survey" described at the Brussels conference.

Only 39 per cent of Dutch people believe the euro has been beneficial for their country, and only 41 per cent of Germans.

Overall in the eurozone, 53 per cent believe the euro has brought advantages, while 36 per cent believe it has been harmful, according to the survey, conducted by Gallup at the end of last year.

In Britain, scepticism has remained constant in recent years, with roughly two thirds of Britons believing the euro will not replace the pound.

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Subject: Spanish news

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