Re: refused work visas .. And why would they do that?
The euro is steadily increasing in value against the pound.
Temporary fluctuations in foreign exchange rates are not a substitute for economic analysis.
That smart money is betting on the euro having a better future.
Smart? Ha ha ha ha ha ha ha! Wheeze! If smart money always knew what it was doing, please explain the recent global crash?
The Euro, in it's current form, is doomed. That doesn't mean it'll collapse, just that it'll have to change, or some countries will have to leave.
Ireland's GDP is predicted to grow at 8% next year. Greece will be minus something, France and Italy will stagnate, Germany is predicted to get about 1.2% growth. Riddle me this: How is the ECB supposed to set the correct interest rate?
What do you think caused the last Eurocris? In the last boom, Germany was barely growing, as they'd decided to fuck over their fellow currency users by cutting wages for export companies (Hartz IV). This increased their exports, but at the cost of domestic demand - and with the hang-over from the unification with East Germany it left the economy very sluggish. It was also a breach of the Growth and Stability Pact, which was supposed to stop governments over-spending (France and Germany first broke that in 2003), and also to keep intra-Euro trade surpluses down and stop competitve devaluation.
Meanwhile Ireland and Spain (for 2 examples) were growing much faster. France was also growing slowly, as it has consistently done since joining the ERM (precursor to the Euro).
The ECB set interest rates quite low, to help France and Germany. Spain and Ireland were therefore saddled with interest rates lower than their inflation rate! During a boom. Thus making borrowing money effectively free. Can you see how this might go wrong, and lead to a huge speculative housing bubble? Well, guess what happened...
Germany, and the other trade surplus states, had a surplus of cash. The reason the rules on stability were there. BTW Germany's intra-Euro trade surplus has been over the 6% limit for the last 6 years. The European Commission haven't even written them the mandatory letter to tell them off, let alone taken the actions to start punishing them for their breach of the Eurozone rules. Funny how they're so great at preaching about budget deficits though...
Anyway a country with a trade surplus by definition isn't spending enough internally. So they're not buying exports from their target markets, and have cash left over. But with insufficient demand in their economy (else they'd have balanced trade), they will have excess savings. Excess savings won't find anywhere to be invested internally due to low demand, so get invested abroad. This funds the trade deficit of the other countries). Hence German banks lent loads of money (very badly) to Greece, Spain, Ireland etc. - which pumped up their booms even higher, and then made the inevitable crash far more devastating.
This is called an asymetric shock. And is what was predicted by the economists before the Euro came into being. Policy cannot be coordinated, because now Germany is growing, but Italy's economy is smaller than it was when it joined the Euro.
The correct policies for different bits of the Eurozone bugger up the other bits. This is also true of any single currency area, though the US and UK have more convergent economies than the Eurozone does. But also we have fiscal transfers. Hence we spend more on Scotland than it raises in tax, and this makes up for the oil shock. And saves Scottish workers from all having to take pay cuts (like Greece) or move South. The US Federal government also sends more cash to those states with greater needs. I quote from Tim Worstall, formerly of this parish, for the graph at the top - though I'm sure the article is also good: Torygraph linky.