The Strong Euro Is Destroying Jobs

The dollar continues to fall against the euro.

The strong euro -- and weak dollar -- is making it increasingly difficult for European companies to do business overseas. SPIEGEL ONLINE spoke with German government economic advisor Peter Bofinger about the dangers of an unfettered euro and what the European Central Bank should do.

SPIEGEL ONLINE: Mr. Bofinger, the euro topped the $1.48 mark on Tuesday, and it looks like it might just keep on climbing. But, as opposed to when the euro dramaticly rose in 2001, relatively few politicians and managers have complained about the currency's strength this time around. Why not?

Bofinger: I'm wondering the same thing. Here in Germany, we are dealing with a number of smaller issues, things like how long we should pay unemployment benefits or tax cuts for commuters. But the euro just keeps getting stronger and stronger. And not just against the dollar, but also -- and this is absurd -- against the yen, despite the fact that Japan has the highest current accounts surplus in the world. The rising euro is really destroying jobs, but hardly any attention is being paid to it anymore. It's odd because the exchange rate is, at the moment, incredibly important for our continued economic growth.

SPIEGEL ONLINE: The euro has been climbing for years, though. Hasn't the economy long since learned to live with a strong European currency?

Bofinger: In recent years, the appreciation of the euro has gone hand in hand with a dynamic and growing world economy. The expensive euro was easily set off by that growth. Now, though, the euro's climb is set against the backdrop of slowing global demand -- and that is a new aspect.

source: spiegel.de