Effect from the introduction of the E uro to the northern countries of the E urozone

1. EffectfromtheintroductionoftheEuro tothenorthern countries oftheEurozone

2. Agenda • Introduction • Current account in % of GDP • Current account in absolute terms • Government debt in % of GDP • Government debt in absolute terms • Interest Rates / Inflation • Conclusion Introduction of the Euro

3. Introduction - Map • Germany • Belgium • Netherlands • Ireland • Austria • Finland Introduction of the Euro

4. Introduction - History • 1992: The Maastricht treaty was signed by the countries who want to introduce the Euro • 1995: EU started to analyse if the countries fulfilled the thresholds • 1999: Euro was introduced in non-physical form; the old currencies were finally fixed; formation of ECB • 2002: Euro notes and coins were introduced Introduction of the Euro

5. Current account in % of GDP of the northern countries Different levels Some run deficits, some run surpluses Average change not that much Introduction of the Euro

6. Current account in absolute terms Individual run of curves before euro Increasing after introduction of euro Especially in Germany, Netherlands and Austria increased the CA Decrease of CA in Ireland Who bought all that stuff? Introduction of the Euro

7. Current account in absolute terms compare to others Strong increase of CA in the northern states Short decrease after introduction especially in the whole Eurozone Different development in the Eurozone: North: up; South: down The world and the US run deficits all the time Introduction of the Euro

8. Central government debt in % of GDP of the northern countries Decrease of debt, because GDP increase strongly in some countries Public debt are higher, not in every country the same impact Same directions, but on a higher level Introduction of the Euro

9. Central government debt compare to others The US have a higher public debt, the states and communes have a lot of debt too Same development, but on different levels, in the US and the northern countries of the Eurozone Introduction of the Euro

10. Absolute central government debt Decrease before 1999 because of the Maastricht treaty Special case in Germany before 1999 because of introduction of GDR and new chancellor in 1998 Sharp increase after 2001 (dotcom-crisis) Introduction of the Euro

11. Absolute central government debt compare to others Same effect after Introduction of the Euro (dotcom-crisis) But different development of debt before 1999 The northern states had to lower the debt, because of the Maastricht treaty (It would be even higher without Germany) Introduction of the Euro

12. Deficits in % of GDP Maastricht –Threshold for the deficit is 3% Even the average is 2003 under 3% Some other countries must run bigger deficits Introduction of the Euro

13. Interest rates / Inflation • Difficult to compare because every central bank used a different approach to fix the interest rates • Generally the smaller (and the southern) countries profits from lower rates because the currencies is more liquid and reliable (in my case i.e. Ireland) • They could borrow money much cheaper with the euro than before • For “my“ countries Inflation changed not that much, but for the southern countries Introduction of the Euro

14. Conclusion • The Maastricht criteria’s were not effective • The smaller (and southern) countries profit from the introduction of the euro by borrow money by lower rates • The northern countries profit form them because they could purchase more goods to the other countries; the export industry profits • It is like a win-win situation, in the beginning… Introduction of the Euro

15. Bibliography • Eurostat • OECD • IMF Introduction of the Euro