Are they really that stupid?
Political heavyweight Joan Collins lays into the euro today saying that it has made the cost of living on the Cote d'Azur 30% higher. She then gives two examples, which actually show a 40% increase, 'dinner at the village bistro, which used to cost £10, is now £14'. Worse still, the pair of shoes that cost '£25 now costs £35'.Now putting aside the difficulty one has in believing Joan Collins buys shoes that are £25, or eats meals that are £10, her comments echo those of Rod Liddle -- the thinking man's Tory* -- who said that prices had risen by up to -- you've guessed it --30% due to the euro.
This seems strange. The inflation rate of the Euro-area countries has risen by about 3% since euro notes and coins were introduced in 2002 (which is what I assume they are referring to given prior to that most goods were still priced in national currencies). Yet Collins' and Liddle's inflation rate has been ten times as much!
What is going on?
The simplest explanation would be that the goods Collins and Liddle buy are not representative of the population at large. This could be true -- they probably as holiday makers spend more on services which tend to have a higher inflation rate. Yet service inflation in the Eurozone has not been 20% a year over the last 18 months, and in any case we know that Collins spends her money on meals out and cheap shoes. So this can't be the explanation.
And then I realised. Collins doesn't understand that Sterling IS NOT THE CURRENCY OF THE EURO AREA. Hence they are quoting prices in pounds. And sterling has fallen against the euro by 17% since Jan 1 2002. Add in 3% inflation, and you get a 20% increase in sterling terms. Not quite 30%, but the final 10% would be relatively easy to explain by reference to changing relative prices. Liddle makes reference to local currency prices, but I think he's really suffering from the same illusion.
So let's think about the implications of this if I'm right. A former editor of Today and associate editor of the Spectator, and...well and Joan Collins...both are blaming the euro for the rising sterling price of European holidays, when of course the exact opposite is true -- it is our failure to be a member of the euro which leads to prices in sterling of imports (for this is what they are) being more expensive. Truly bizarre.
* It seems years ago now, but do you remember when the right were up in arms about Rod Liddle's editorship of Today? Then again that was back in the days when the BBC was New Labour's poodle, or fifth column, or armed wing, or whatever.
posted by Matthew @ 8/18/2003 01:06:00 PM
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