Why the UK Should Join the Euro

As reported by Eurointelligence,  a new publication collects the views of 31 contributors that advocate the entry of the UK to the euro area. (This initiative was convened by Peter Sutherland.)  An executive summary of “10 years of the Euro – New perspectives for Britain” can be download here. The full report is available here.

Industrial output declines

I have been reading and enjoying www.thepropertypin.com for a few years now. You learn a lot about the Dublin property market, and sometimes about other stuff too.

I recently came across this post which alerted me to recent Eurostat industrial figures that ought surely be getting more airplay. As you can see, in the year to November 2008, industrial output dropped by 7.7% in both the Euro area and in the EU as a whole. There was a wide range in performance across countries:

Among the Member States for which data are available for November 2008, industrial production fell in nineteen and rose only in Ireland (+2.6%). The most significant decreases were registered in Estonia (-17.6%), Spain (-15.1%), Latvia (-13.9%) and Luxembourg (-13.8%).

Now, the question is, are these big numbers or small numbers? Here is a table giving changes in industrial output between 1929 and 1937. Looking at the three-year declines between 1929 and 1932, and comparing these with the one-year declines from 2007 to 2008, my answer is that these are frighteningly big numbers. Industrial output is not declining at the rate experienced in the US or Germany during the Great Depression, but that is setting the bar pretty low. It is declining more rapidly than the average falls experienced in Europe as a whole during that period (although those average falls are unweighted, and thus have a large health warning attached to them).

Wages and Employment

The idea that wage cuts would be deflationary and employment-reducing is being used in some quarters to argue against public sector wage reductions.  Herbert Grubel has a relevant short paper on the use of the Marxist “under consumptionist” argument to obtain wage increases in the US during the Great Depression.

See:

http://www.sfu.ca/~grubel/marx_,_unions_and_current_crisis.htm

New housing reports

(upgraded from the comments) Ronan Lyons says:  Following on from this, two reviews of the Irish property market out this morning (14th Jan), with similar conclusions for 2008 (-15%) and prognoses for 2009 (-10%):
http://www.daft.ie/report/Daft-House-Price-Report-Q4-2008.pdf
and
http://www.rte.ie/news/2009/0114/iavi.pdf

For the daft.ie figures, the calculations underlying the percentage of total stock for sale by county are available here:
http://manyeyes.alphaworks.ibm.com/manyeyes/visualizations/irelands-property-overhang