BETTER late than never but it is probably too late. French President Nicholas Sarokzy and German Chancellor Angela Merkel yesterday proposed a new treaty for the European Union which would mean that all states which fail to meet a three percent budget deficit rule would face heavy penalties. But as usual with the European Union the new deal will take months to ratify because it has to be agreed by all states. I believe that the writing is on the wall for the single currency in its present form. The three percent budget rule should have been in force when the euro was first launched a decade ago.
If it had been I sincerely believe that the euro would have been better placed to weather the economic storm. The euro will survive but I suspect that it will have fewer members, a two speed Europe is on the horizon. In the fast lane will be France and Germany and in the slower lane will be the countries who are unable to bring their budget deficit under control, in this group I place Portugal, Greece, Ireland, Italy and probably Spain. Now there is a strong possibility of a two speed euro and a third speed European Union with the next group being countries who are not members of the single currency. There are important splits in Europe and despite calls for a united front many countries put their national interests first and the European Union second. Unless this state of affairs changes I can´t see the European Union ever really working.