Germany chemical industry stands by euro – VCI

12 July 2012 15:30  [Source: ICIS news]

LONDON (ICIS)--Germany’s chemical industry is committed to the euro and believes that the common currency can survive in the long run, a trade group said on Thursday.

However, for the euro system to work, eurozone members in southern Europe need to improve their economic competitiveness, Frankfurt-based Verband der Chemischen Industrie (VCI) said in an assessment of the ongoing crisis.

“We can achieve a stable euro if reasonable common fiscal policies are being pursued, and if all eurozone members continue to pursue the path towards consolidation seriously and consistently,” VCI said

Germany’s chemical industry supports the German government's policy approach of “promote and demand”, that is, of granting aid but demanding that receiving countries fulfil certain fiscal conditions in return, the group said.

VCI warned said that agreements reached at the EU’s recent summit could soften this policy approach.

In particular, the conditions under which the European Stability Mechanism (ESM) will grant aid to directly recapitalise banks were not stringent enough, thus raising risks that the ESM may run out of funds and the fiscal pact may fail, the group said.

At the same time, VCI welcomed the summit’s move to further promote growth and employment in the EU, it said.

Germany’s chemical producers are committed to political and economic union within the EU, and in particular to the common currency, the group added.

The euro eliminates currency exchange risks, brings lower inflation and interest rates, and stimulates the common market, it said.

A failure of the common currency would result in incalculable risks and costs, it added.

In related news on Thursday, VCI said that Germany’s chemical and pharmaceutical production fell by 4% year on year in the first six months of 2012, largely because of the effects of the eurozone crisis.

However, despite the decline, VCI maintained its previous forecast of zero year-on-year production growth for 2012, saying that full-year chemical and pharmaceutical production will still be level with 2011 production.

VCI represents the interests of about 1,650 Germany-based chemical firms. 

Paul Hodges studies key influences shaping the chemical industry in his Chemicals and the Economy Blog


By: Stefan Baumgarten
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