2010 was not a great year for the Eurozone; yet while debate continues to rage on about its future and whether countries will leave the single currency, the number of countries that use the Euro has now increased.*As the clocks struck midnight around Europe, Estonia became the 17th member of the Eurozone.
While Estonia is a small country (it is one of the least populated EU members with only 1.3 million people living there despite it geographically being marginally larger than the Netherlands where more over 16 million people live), it is also a considerable economic role model for its fellow Eurozone members.
Yes its economy is tiny in comparison (with its GDP just above €20 billion); but the Baltic state carries a public debt ‘burden’ of just seven percent GDP and its government managed to keep the budget deficit at just over one percent of its GDP (for comparison: UK: near 60% GDP; Germany and the Netherlands: more than 70% GDP; Greece and Italy more than 100% GDP).
The Euro has been in circulation in Estonia alongside the Kroon
since 2002 so it will not be unfamiliar to its citizens, but it shall be interesting to see how the other Eurozone members react to the arrival of a new member with an impressive record of economic management.
For the sake of the Eurozone, let’s hope 2011 turns out to be a better year.
* While it is undoubtedly still a vote of confidence in the single currency that another member chooses to join at this crucial time, it should be noted that all member states of the European Union (except the United Kingdom and Denmark) are committed to joining the Eurozone as soon as they fulfil the convergence criteria which were agreed in the Treaty on the European Union signed by EU leaders in Maastricht in 1992.