French Press Exaggerates Cost of Euro Exit

28.02.2017 • Politics and War

Olivier Perrin – The Brave Little Economist (Switzerland) –

If we leave the Euro, it will be terrible.

“A catastrophic scenario” according to the Huffington Post
“An astronomical bill” according to Capital
“A cost of 180 billion euros and 500,000 jobs” according to the Figaro
“Massive and brutal effects” according to France Infos

The scenario is effective and the effects impressive.

Fortunately state reporters and well-intentioned experts crowd are there to warn you and avoid you the worst.

The subject usually does not interest them so much. But there we are in the presidential campaign. Under cover of economy, what interests them in fact is politics: they camouflage the old argument of the “barrage to the extremes” . It is not economy, it is propaganda.

Let’s put the policy aside and look at the economic consequences of an exit from the Euro.

How much does it cost ?

This is the hammer argument of the conventional press: it will cost us so dearly that the possible remedy will be surely worse than the evil.

At issue: If France comes out of the Euro, the new Franc would immediately be devalued, impoverishing us all at once.

You have to be self-conscious or in bad publicity to advance a figure on the cost of an exit from the Euro.

The Montaigne Institute has dared to say that an exit from the Euro would cost about € 180 billion a year and in the long term … the equivalent of ten million salaries to the SMIC every year .

The Institut Montaigne is a think tank created by Claude Bébéar, a close supporter of Emmanuel Macron to reconcile competitiveness and social cohesion : in short it is a propaganda organ .

To make this calculation, these gentlemen of the Institute had access to a software of the Ministry of Finance in the name of bird: ”  Mésange  “.

It is a short-term forecasting software but does not prevent the institute from making long-term forecasts .

Above all, It is a software that calculates  in euros . But if you leave the Euro you no longer count in euros, but in francs.

This is a nasty pirouette of study: it is as if you wanted to measure your height in kilograms or you look at the French economy today by counting in dollars:

The Euro has lost 30% of its value against the Dollar for 3 years . In short, between the Euro and the Dollar, what the Institut Montaigne expects in the event of the Euro’s exit: a major devaluation, which is the source of all evils.

In 2014 , France’s GDP was € 2141 billion or $ 2839 billion .

By 2015 , France’s GDP was € 2181 billion, but only $ 2419 billion due to currency fluctuations.

In one year, French GDP in dollars fell by 15% , well above the long-term 9% drop in GDP of the catastrophe scenario envisaged by the Montaigne Institute.

You have already experienced the drama announced by the Institute in much worse. Yet your salary has not moved, nor the price of your bread baguette.

The calculation of the Institut Montaigne is a big stupidity (or manipulation) which does not mean anything at all.

The truth is that there is no model that will allow us to approach the cost of an exit from the Euro.

If we leave the Euro, it is the great unknown . To leave the Euro is like a break in love after 15 years of common life. You do not know what tomorrow will be.

This is the question that the Greeks must ask themselves since 2010. In their case, what we know is what happens while staying in the Euro .


To your good fortune,

Olivier Perrin

-Read more at (French)-

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