It is now becoming clear Germany has had enough of this euro mess

Sunday, November 27, 2011
By Paul Martin

The Anglo-Saxon world is feeling smug this weekend. UK and US policymakers are counting their blessings they’re not directly embroiled in the historic debacle that is the single currency.

By Liam Halligan
TelegraphUK
26 Nov 2011

This euro crisis is obviously very seriously undermining global investor sentiment. The negative impact on growth, both in Britain and the States, is clear. It is axiomatic that the financial chaos stemming from a fully-blown, market-induced “euroquake” would cause deep aftershocks everywhere, not least across the rest of the Western world.

There is palpable relief, though, in London and Washington that attention is now squarely on the eurozone’s woes. That makes life easier for the deeply indebted Anglo-Saxon governments – which is particularly welcome for Chancellor George Osborne, given that he is about to give his Autumn Statement.

Osborne’s speech writers will, no doubt, make much of the fact that UK government bond yields last week went below those of their German counterparts. That happened, though, not because the coalition’s debt-reduction plan became more credible. On the contrary, the upending of the UK’s growth assumptions has made it even less likely that Britain’s fiscal numbers will add up.

It is essential, despite political temptations, that Osborne doesn’t use Tuesday’s statement to misrepresent this recent gilt-yield respite. The UK’s deep fiscal problems remain. It’s just that, for now, the bond market vigilantes are focused on the eurozone – which isn’t surprising. For the single currency’s difficulties are compounding by the day.

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