If Euro is to blame for our troubles, what about other EU countries?


11:20 am - November 24th 2011

by Richard Exell    


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Here’s a question: if the UK’s economic woes are caused by problems in the Eurozone, why isn’t this afflicting other countries in the EU but not in the Euro?

Over the past couple of weeks, Duncan Weldon and yours truly have highlighted evidence against the government’s latest excuse for economic incompetence.

Now there’s more.

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.

The date below shows 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 Eurozone problems are holding back British firms, why isn’t that happening to other non-Euro economies, where it is an even more important market?


cross-posted from Touchstone blog, which has a longer version.

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About the author
Richard is an regular contributor. He is the TUC’s Senior Policy Officer covering social security, tax credits and labour market issues.
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Reader comments


There must be something wrong with your analysis, from which Denmark appears to be an economic powerhouse.

This will come as news to Moody’s, Bloomberg and the Danish government.

Denmark’s $325 billion economy is Scandinavia’s worst performing as the nation grapples with a regional banking crisis funding and housing slump. Most of the country’s banks have been cut off from funding markets, squeezing credit and stalling growth. Moody’s Investors Service said yesterday Denmark’s banking outlook remains negative amid sluggish economic prospects.

“International turmoil continues to damp the development,” the Finance Ministry said in a statement on its website. “Our exports had held up but are now also retreating; domestic consumption has ground to a halt.”

http://www.bloomberg.com/news/2011-11-03/danish-economy-will-grow-1-1-next-year-economic-council-says.html

Evidently, it’s in Britain’s karma to join the Eurozone:

Britain will have to join the euro, says Tory grandee Lord Heseltine
http://www.telegraph.co.uk/news/worldnews/europe/eu/8902450/Britain-will-have-to-join-the-euro-says-Tory-grandee-Lord-Heseltine.html

Flowerpower

The figures aren’t from him, but Eurostat which compiles stats and data from throughout the EU.

@1 – And that affects industrial new orders, given their lead times, because?

Flowerpower,

The data is not GDP but the value of ‘industrial new orders’. So the Danish figures may be accurate – but without absolute values, per capita values or even indications of the overall pattern, on their own these figures are useless. Denmarks ‘industrial new orders’ increased by 14% from August to September – brilliant, but if they were 0 in August, they would still be 0 in September (OK – maybe a less absolute number would have worked better there, but the point stands). It may be Denmark is doing well, but it may be they are simply recovering from a bad position. The statistics as presented are valueless (no useful comparison possible), but they are not wrong.

Richard,

Presumably you have considered the level of government debt, taxation etc in all these countries?

I just ask, because clearly the Eurozone is not the root of the UK’s problems (albeit it probably is impacting on growth), but I suspect that debt and high taxation play a major role.

Readers may like to checkout some of Denmark’s vital economics stats here:
http://www.economist.com/node/21538767

Denmark’s current balance of payments as a percentage of national GDP: a surplus of 5.4pc, so there is hardly a competitiveness issue.

Denmark’s budget balance as a percentage of national GDP: a deficit of 3.9pc. That compares with the average budget deficit for the Eurozone of 4pc and France’s
deficit of 5.8pc.

The latest interest rates paid on 10-year Danish government bonds: 1.96pc, which compares with 1.81pc for Germany and 3.69pc for France.

With stats like that, Denmark outside the Eurozone is hardly in dire straights.

@ 3 & 5

I didn’t say the figures were wrong, just the analysis, which seeks to draw conclusions such as: Sweden & UK doing worse than Denmark.

As you say, Watchman OP’s presentation is valueless. So is its thesis.

This whole argument is stupid anyway. By “Economic Incompetence ” they only means failing to borrow even more to throw at Duncan `s Public Sector Union paymasters .

10. Leon Wolfson

@9 – Yes, you are stupid, when you’re talking propaganda and gibberish. Thanks for that, go back to ConHome.

@6 – Debt lower than America’s, which is doing better, and lower taxation than plenty of EU countries which are doing better. But no, we’re SPECIAL, it’s nothing to do with austerity it’s just…what…magic?

Leon,

Debt lower than America’s, which is doing better, and lower taxation than plenty of EU countries which are doing better. But no, we’re SPECIAL, it’s nothing to do with austerity it’s just…what…magic?

Any figures to back up your assertions. I asked a serious question.

Incidentally, are you sure that we have lower taxation than those European countries that are doing well. Including all those irritating little extras, such as National Insurance (employers contributions) etc?

From the Eurostat pdf it seems that the figures for ‘manufacturing working on orders’ can be highly variable for some countries. Denmark is up 14% in September, but was down -7.6% and -8% in July/August respectively (and up a whopping 25.9% in June). In fact, the eurostat numbers come with this warning:

“Due to the volatility of industrial new orders, the figures can vary significantly from month to month and therefore short-term movements should be interpreted with caution.”

Presumably smaller countries show more volatility in these numbers? – a big order in Latvia might only be a small order in the UK. There is some adjusted figures towards the end of the pdf, but I am not into this stuff enough to know whether they are better numbers to look at…

If I had to give a ‘take home’ from then though: PIIGS + Fs (France and Finland) = knackered, Old Europe + Scand = surviving, New Europe = growing

According to these Eurostat figures, Denmark’s GDP per capita at PPS exchange rates shows an impressive standard of affluence, compared with the average for Eurozone members, when the OECD confirmed Denmark as the highest-taxed country among OECD member countries:
http://epp.eurostat.ec.europa.eu/tgm/table.do?tab=table&plugin=1&language=en&pcode=tsieb010

Further reporting that confirms the OP is wrongheaded:

as Europe’s debt crisis escalates to dangerous new levels, there are signs that even Sweden’s star economy is losing some of its shine. Housing markets are cooling off, industrial orders are slipping and consumer confidence has taken a hit.

In a recent note to investors, the Swedish bank SEB predicted that GDP growth, which charged ahead at 5.7 per cent in 2010, would slow to 0.7 per cent next year…

With 50 per cent of its GDP dependent on exports, half of which are destined for other European nations, Sweden’s small, open economy is vulnerable to negative developments in Europe.

http://www.theglobeandmail.com/report-on-business/international-news/global-exchange/globe-correspondents/euro-zone-woes-sideswipe-swedens-tiger-economy/article2247273/

But, of course, the OP writer will insist the eurozone turmoil affecting everyone else has no effects here.

15. DisgustedOfTunbridgeWells

BECAUSE SHUT UP, OKAY.

Would the OP care to put up the indexed data here as well the month on month data, as MoM data is pretty useless if youy can’t see the whole trend and can’t see where trend started.

Other countries might have had better data that the UK in the month of data they show, but what about other months?

My feeling without looking at all the data is that the OP has cherry picked this data to suit the point they are trying to make.

I would also point out that this site seems to be running a lot of ‘it’s not Europe’s fault, it’s the Tories and austerity’ articles at the moment. No dount Sunny is once again being briefed by the Labour party and Union spin machines and isfaithfully on message.


Reactions: Twitter, blogs
  1. Liberal Conspiracy

    If Euro is to blame for our troubles, what about other EU countries? http://t.co/a7Tl4v4X

  2. Dale Quigley

    If Euro is to blame for our troubles, what about other EU countries? http://t.co/a7Tl4v4X

  3. Kai Bui

    http://t.co/IyIMtE4k If Euro is to blame for our troubles, what about other EU countries …

  4. Alex Braithwaite

    If Euro is to blame for our troubles, what about other EU countries? | Liberal Conspiracy http://t.co/eKn8etub via @libcon

  5. Jamie

    If Euro is to blame for our troubles, what about other EU countries? http://t.co/gyA1bVem

  6. Jamie

    If Euro is to blame for our troubles, what about other EU countries? http://t.co/gyA1bVem #Eurozone

  7. sunny hundal

    @markpack see these figures too http://t.co/KTHhiQ8r





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