News that the euro dropped to its lowest in four years against the dollar did not do much good to the currency’s credibility in the eyes of the markets and backs up Angela Merkel’s statement that the ‘shock and awe’ financial package merely bought time.

The truth be told, this was merely a stopgap measure. When the news of Greece’s bailout became public, many economists and commentators said it was too late as huge deficits and national debt were endemic problems within the EU.

Credit rating agencies began to point fingers at Spain, Ireland, Portugal, Italy and even France – and so the €750 billion rescue fund was set in motion. Mrs Merkel has gone on record saying that this is merely a stopgap measure and that we have bought some time.

But bought time for what? The only way that the euro can regain any strength is that if there is a concerted effort to tackle exploding deficits and national debt across Europe. Malta’s contribution to the eurozone economy is a mere drop in the ocean, but we must realise that as a country that uses the euro – all these decisions will affect us. That is what the euro means – taking the good with the bad.

The eurozone originally thought that they could stem the tide – even with Greece by offering a bailout. It immediately became clear that the markets were not impressed. The eurozone went one further and set up a joint fund with the IMF – €750 billion, but still market confidence is elusive. The markets are just not convinced that the euro is a safe bet.

As Mrs Merkel put it, the underlying debt and deficit problems need to be tackled before any progress can be registered. The primary concern of the markets is that there are 16 different economies with different levels of deficit and debt – which is why there is uncertainty about the euro. The only way that the problem can be solved is if there is a clear and coherent steering programme to bring all eurozone economies into line. But that is only the start, they need to remain on track. We are looking at countries like Malta with a deficit of almost four per cent, Germany with 3.5 per cent and then Greece and Portugal which are registering deficits of 12 per cent and more. No wonder there is no confidence in the euro at the minute. But this is going to bring about the age old problem – the incompatibility of fiscal union without political union. Yet, there have been developments. We have seen the European Central Bank intervening directly in buying up eurozone bonds, and we have also seen the European Commission (very slowly and belatedly) coming up with a vague plan of implementing much stricter monitoring of European economies. As it stands, Europe is at the mercy of the credit rating agencies – which of course, are playing every hand they get to their own advantage.

Last night, there was an Ecofin meeting in Brussels, precisely to debate these problems and to forge a clear plan of action. It is needed. As things stand, Malta’s currency is not performing well against others, such as the dollar, and it is through no fault of our own. Having said this, we knew that this could be the case – as we have mentioned – you take the good with the bad. But Malta now needs to start putting its foot down and along with other ‘good’ performers, begin to make demands for economic restructuring, slashing of debt and narrowing of deficits. Yes, this will stifle economic growth – but surely, that is the price others are going to have to pay for violating the terms of the Maastricht treaty which stipulates that a three per cent deficit allows sustainable economic growth. False economic growth running on credit alone and racking up massive deficits does no one favours in the long run. Just ask any Greek, Spaniard or Portuguese. Make no mistake, they will have to pay for it.