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Euro News And Effects To The Fiji Economy

BREXIT – “This isn’t one more crisis, this could very well be the crisis threatening its very existence”, a statement by France President Francois Hollande. The European Union (EU) is
29 Oct 2016 11:00
Euro News And Effects To The Fiji Economy

BREXIT – “This isn’t one more crisis, this could very well be the crisis threatening its very existence”, a statement by France President Francois Hollande.

The European Union (EU) is in crisis and Britain’s departure could be the bloc’s breaking point.

Europeans are very unhappy with the situation and are closely looking to Britain as they walk on uncharted waters in discussion of exiting from the trade bloc.

A successful Brexit could in effect start a stampede of member states towards the exit door that could see the EU crumble.

A research from think-tank Demos highlights the feelings Europeans have towards the trade bloc as British people are.

Britons are most keen to leave the EU with 45% saying it should be their “long term” aim.

Fewer people in France (22 percent) and Germany (16 percent) feel they should leave the EU but many more want to see the EU power reduced (France 22 percent and Germany 33 percent).

According to the Pew Research Center – over 60% of French people feel unfavourably about the EU. France and Germany’s leaders have consistently sought to defend the EU and further powers, but many of their citizens feel the bloc is pointless.

 

Comprehensive Economic Trade Agreement

From the Brexit, the EU has ongoing 7 year pending trade agreement discussion with Canada called CETA (Comprehensive Economic and Trade Agreement).

This would set up a free trade zone between the EU and Canada that could strike down any effort for Britain to strike a new deal with the bloc after Brexit.

The Deal will bring benefits for people and businesses across Europe.

It will help generate growth and jobs by, boosting exports, lowering the cost of the inputs business need to make their products, offering greater choice for customers and upholding the EU’s strict standards for products.

However, currently it is not going as planned as Canada trade minister Chrystia Freeland stated on BBC after CETA talks, that the EU was “not now capable” of striking an international trade accord.

The agreement is backed by all EU member states apart from a single region of Belgium strongly opposing it.

Belgium’s political structure means that it cannot fully agree with the deal unless all five regions agree to it even though the central government fully supports the agreement.

The trade agreement outcome will serve as a litmus paper gauging the trade blocs’ capability to make agreements with large economies outside of the union. An unfavourable outcome could further weaken the EU economy.

 

Other Major European News

Germany is the largest economy in the EU and ranks as fourth in the world in terms of nominal GDP fuelled mostly by exports in machinery, vehicles and chemicals.

A change in its economy influences the state of the E.U. as well as its Euro currency.

German company Volkswagen, the largest automobile manufacturer and the largest carmaker in Europe employing more than 600,000 employees with 121 production plants across Europe settles a fine from US Department of Justice of $14.7billion over its diesel emissions scandal. The largest ever settlement of any kind in U.S. history.

Germany’s leading investment bank, Deutsche Bank has ongoing negotiations of a $14 billion fine by U.S. Department of Justice for mortgage-backed securities. Negotiations believed to carry on into the next few months

 

Euro News Effects on Fiji

The pressure the European Union is facing is taking a negative toll on its Euro currency as it is weakening against other currencies.

This can be seen in comparison to our Fijian dollar since the beginning of the year 2016 as shown by the graph below.

Since January there has been a general increase in the trend of the Euro signifying that it takes more Euro to buy a Fijian Dollar. From January, the Euro has weakened by 35% from 0.4176 to 0.4328 in October.

This is good news for Fiji importers from the E.U. as their Fijian dollar can will use less Fijian dollar to buy their European goods.

However, it is bad news for Fiji exporters to the E.U. as their goods have become more expensive.

Remittances from families and friends living in Europe mostly British Army and European based rugby players will also be affected along with their family here in Fiji as their Euro will receive less Fijian dollar when they send the money over.

As the Euro weakens so does the amount of Fijian dollar the family and friends will get for their Euro.

On the other hand for those travelling to the EU with Fiji Dollars, they will be able to receive more Euros for their Fijian dollars and enjoy their visit.

 

This is an informative publication, sponsored by The Fiji Sun, Fiji Bureau of Statistics and HFC Bank. All views expressed or implied are purely of the Treasurer at the HFC Bank, Peter Fuata.

FeedBack: rachnal@fijisun.com.fj

 

 

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