Europe’s director of the International Monetary Fund, Rodrigo Rato, says the euro’s strength and higher oil prices threaten the eurozone’s economic outlook.He reccommends the US “speed up and deepen” cuts in its budget deficit, and for Europe and Japan to improve growth. Otherwise, he warns, the market will set a new international balance, but probably in a “more costly and less efficient way for everybody”.
Outgoing French finance minister Nicholas Sarkozy is the latest european moneyman to lay into the percieved failings of the Federal Reserve, US treasury, and Wall Street for the currency turmoil, and his Japanese counterpart has also stepped up his criticisms. On the day to day level for shoppers and tourists the significance of all this is europeans in America have spending power, whereas Americans abroad are finding it tough, and are spending less while visiting. Bad news for european retailers in tourist traps, good news for prices if we buy American, in the short term anyway, but if this continues european producers will lose custom and market share.