It’s time for supporters of the single currency to apologise

Allister Heath
SOME of the stories coming out of the Eurozone are heart-breaking. Greece’s retail sales are down 13 per cent over the past year, a tragic and all too painful collapse for millions of families. Economists sometimes compare the UK’s recession with the great depression: while technically true in various narrow, statistical ways, such a parallel is facile given how wealthy we remain overall. But it is an accurate analogy when analysing what is happening in Greece, where unemployment is now 21 per cent and where bank accounts are emptying out, as anybody with any sense moves their money out of the country or into non-financial assets.

Spain is back in recession; 23.6 per cent of its workforce is unemployed, rising to a horrendous 50.5 per cent for young people (in Greece, it’s an equally atrocious 50.4 per cent). Spain’s GDP will shrink substantially this year and next; the recession is becoming never-ending, inevitably meaning an even larger budget deficit, despite the latest attempts at austerity. If they had any self-respect and integrity, supporters of the euro – who thought the discipline of a single currency could coexist with social-democracy and ultra-regulated labour markets – should apologise to the people whose lives they have blighted. Needless to say, the euro-elites – and the establishment economists who provided them with intellectual rationalisations for their grandiose political dreams and grubby power-grab – are blaming everybody but themselves, and are still desperately fighting to save the unsavable.

But the story that truly captures the imagination comes courtesy of New York University’s Development Research Institute. It highlights the influx of Portuguese immigrants to Angola – an economy that has been growing by over 10 per cent a year since peace broke out in 2002 – and Mozambique, in a dramatic reversal of roles between erstwhile colony and ex-imperial power. There was a time when poor Africans flocked to southern Europe to better their lives; the opposite is now happening. Five hundred years after Vasco de Gama first landed in Mozambique, impoverished Portuguese are turning up in droves, begging for work permits. Six years ago, Angola issued 156 visas to Portuguese migrants. In the most recent year for which data is available, that number had exploded to 23,787; 100,000 Portuguese have moved to Angola, four times more than the traffic in the opposite direction. Other studies have shown a brain drain of Portuguese to Brazil and of Spanish youngsters – especially skilled graduates – to Latin America.

Portuguese workers in Angola now send home more cash to their families than Portuguese workers based in London. For millions of young people, Europe appears in terminal decline, while parts of Africa have emerged as a new Eldorado. The Eurozealots thought the single currency would turn old Europe into a new superpower; instead, it has catastrophically impoverished tens of millions of ordinary folk. It is time for an apology.

My fact of the day is the collapse in the US homeownership rate, now at a 16-year low of 65.4 per cent. It peaked at 69.4 per cent in mid-2004. Sub-prime lending was a deliberate policy dreamt up in Washington by Democrats and endorsed by Republicans. Too many people who couldn’t afford to buy were pushed into mortgages; at first, the homeownership rate shot up but now all of the gains have been reversed. A property owning democracy is great – but only if it is not artificially inflated by politicians.
Follow me on Twitter: @allisterheath