'Euro will be stable' claim is ridiculed

Terry Smith, chief executive of Tullett Prebon, said the Mr Schauble was "talking his own book" in hoping the current agreements will save the euro. "The German finance minister has not said anything substantive which changes the situation," he told The Daily Telegraph. "If the eurozone crisis could be solved by confident pronouncements, it would already be saved. I would be shocked if Greece does not leave the eurozone in 2012 and this does not lead the markets to test the resolve to defend the positions of Portugal, Spain, Italy and, ultimately, France."

Raoul Ruparel, from the think-tank Open Europe, said Mr Schauble was trying to "talk up" the rescue processes ahead of the next round of meetings in January. "It's the usual rhetoric over substance," he said.

The euro, whose notes and coins were launched 10 years ago today, fell below 100 yen for the first time in 10 years. Analysts warned that the currency, which has been unexpectedly robust throughout the crisis, might be buckling under the pressure. On the bondmarkets, the yield on Italian 10-year bonds finished the year just above the 7pc danger level.

In Spain, the scale of the crisis was underscored by Mariano Rajoy who forecast a bigger-than-expected budget deficit for 2011. After his second cabinet meeting, the newly elected prime minister said he expected the budget deficit to be around 8pc of GDP, up from the previous government's target of 6pc. The gap is twice the shortfall forecast for Italy and more than four times that of Germany. Mr Rajoy said he would cut government spending by ?8.9bn in the first quarter of 2012 and impose higher taxes on income, saving and higher-value properties.

Hungary passed laws for its central bank in a move that experts warned could jeopardise its chances of securing international bail-out funds if it needs them. Officials from the International Monetary Fund (IMF) have warned about the rules which will undermine the independence of the central bank. Hungarian prime minister Viktor Orban the country would not bow to the "European fashion that the central bank must be in a sacred state of independence".

Source: http://telegraph.feedsportal.com/c/32726/f/568312/s/1b66caa2/l/0L0Stelegraph0O0Cfinance0Cfinancialcrisis0C89852140CEuro0Ewill0Ebe0Estable0Eclaim0Eis0Eridiculed0Bhtml/story01.htm

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